The event of 2011 in the railway business environment will undoubtedly remain the successful privatisation of Russian freight operator, Freight One (Pervaia Gruzovaia Kompania). After a public tender, 75% (minus two) of the shares were transferred from RZD to the company owned by Russian billionaire Vladimir Lisin, Independent Transport Co (Nezavisimaia Transportnaia Compania), for around EUR 3 Billion. This step shows that the reform programme of the Russian Federation’s railway system is indeed focused on identifying solutions for increasing the railway business volume and maintaining a dominant position of this transport mode in the Russian market.
Precisely this step is what urges us to take a closer look on what’s behind this process and in what figures the Russian experience could be translated to other European markets as well. First of all, it should be reminded that the reform was officially launched in 2001, having as main objectives the restructuring of the former Ministry of Railways into a commercial company, separating the main railway activities and creating the premises for economic growth and research boost in the area.
We can say that PGK’s privatisation on October 28, 2011, was among the few such European processes whose results approached the graphic earlier announced by authorities. The European Union member states have already accustomed us with privatisation announcements and annulments, with the launch of a privatisation strategy and with changing it for another. It has already happened in Germany and Romania, if we are to resume to just two examples. The moment of the company’s privatisation came in a time of economic distress and the financial downturn was used by national authorities in the EU countries as excuse for cancelling the process.
If we are to compare two markets – Romania, the country I know best, and Russia – one can see the general expectation differences from the business environment and, implicitly, from the price these two countries put on railway companies.
Romania is a European Union member state and consequently it has implemented the European legislation on liberalisation. However, Romania is just one of the 27 “regions” with a particular signalling, electrification and management system which makes the European network non-interoperable. We are talking about a country with only 238 thousand square km of the 4,324 thousand square km of the EU compared to the 17,098 thousand square km of Russia. The network on this whole territory is, of course, “interoperable” (it is even interoperable with the networks of the CIS and Baltic States countries), through the historic tradition of the joint participation in the former USSR). The two surfaces are covered by railway networks of 10,780 km, for Romania, and 87,157 km respectively, for Russia.
Because these figures are not enough to prove the railway potential of the two countries, we should also say that for a population of 22 million citizens, Romania has a GDP of USD 161 Billion (25% of the people live below the poverty threshold) compared to a population of 138 million and a GDP of USD 1,465 Billion for Russia (13.1% of the people live below the poverty threshold). If we also mention that the Russian railway system ensures the traffic between Western Europe and Central Asia and the Extreme Orient, while Romania is gateway only for Central and Eastern Europe, we will understand why the performance of the Russian railway system, in the first months of 2011, is of 607 million tonnes compared to the 28.7 million tonnes of Romania. PGK represents 22% of the market and has a profit of EUR 472 Million compared to the 50% of the market and losses of EUR 81.3 Million of CFR Marfă. Last but not least, PGK has a fleet of 235,000 cars and 3,800 employees, versus the almost 43,000 cars, 900 locomotives and 15,000 employees of CFR Marfă.
Is CFR Marfă worth EUR 1 Billion as circulated in the Romanian political environment?
by Ştefan Roşeanu
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