Prague Government has announced plans to sell the national railway freight transport operator, CD Cargo. The idea has been resumed by Dan Ťok, the Czech Minister of Transport, and according to him, the operator needs a private investor to maintain its market position.
“CD Cargo operates on a competitive market. But since it is still a subsidiary of Czech Railways, it is on a less than convenient position. It is assumed that a private capital source will support the future investments needed by the operator. I am talking about the much needed new locomotives and wagons”, Minister Ťok told the local media.
The plan to sell CD Cargo has been debated by the Czech Government in the past years. Some governments have promoted the idea, while others have not even considered it on their agenda. The current government, led by Prime Minister Andrej Babiš, does not provide exact information or measures aimed to attract foreign investors, but the Minister of Transport has provided some information to the media.
“Currently, CD Cargo is doing well. But it is my wish that it would also work efficiently in 5, 10 or 15 years. If we don’t act properly now, we might come to a moment when CD Cargo would have no value on the market whatsoever. What would then happen to this operator”, pointed out minister Dan Ťok.
At the same time, CD Cargo is an important subsidiary of Czech Railways and a freight transport subsidiary is a key source of profit for a state-owned holding.
In the first half of 2018, Czech Railways had losses of over CZK 388 million (over EUR 15 million), while CD Cargo had a profit of CZK 350 million (around EUR 14 million).
If the freight division is separated from the holding, then the latter is expected to demand the increase of the state subvention.
The possibility of CD Cargo’s privatisation raises another type of problem about the future of the railway freight transport market in Czech Republic because, over the past years, Polish companies have expanded their activity in this country. In 2015, PKP Cargo bought Czech operator Advanced World Transport (AWT), the second biggest operator after the state-owned one.
At the beginning of October 2018, another Polish company PKP Orlen took over 100% of Unipetrol’s shares, the biggest refinery in Czech Republic. Consequently, Unipetrol Doprava, a subsidiary of Unipetrol and the fourth railway freight transport operator in Czech Republic, is now owned by a Polish company as well.
In Czech Republic, CD Cargo owns a 68.5% share in the railway freight transport market. In 2017, the operator carried 66.1 million tonne of freight.
In the end, the question is who could be the investors interested in this big operator? Would they be Polish, German or maybe a local investor? It is an interesting topic and we will definitely write about it again.
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