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PKP Put Railway Property Management in Order: Here's All You Need to Know

PKP Put Railway Property Management in Order: Here's All You Need to Know
photo: PKP S.A./PKP Put Railway Property Management in Order: Here's All You Need to Know
26 / 01 / 2023

Polskie Koleje Państwowe S.A. has completed the stocktaking of the real estate necessary for the operation of trains and the management of railway lines. Thanks to the in-kind contribution of such assets to PKP Polskie Linii Kolejowe S.A. in the form of an organised part of the enterprise, it will be possible to fully implement the assumptions of the 2000 railway reform in Poland.

On 23 January this year, PKP S.A. announced a tender procedure for the selection of an entity to carry out a valuation of the assets to be contributed in kind.

One of the assumptions of the 2000 reform of the Polish railways, which was carried out under the Act on Commercialisation and Restructuring of the State Enterprise Polskie Koleje Państwowe (Polish State Railways), was the separation of a company specialising in the management of railway infrastructure and the operation of train traffic and then equipping it with the assets necessary for its operations: land, buildings, structures, and other elements. However, since at the time when the PKP Act came into force the legal status of part of the property with which the new company was to be equipped was not settled, a substitute solution in the form of a bilateral agreement was adopted. Subsequently, PKP S.A. contributed fixed assets to PKP PLK S.A. in the form of an in-kind contribution - elements of railway infrastructure being the subject of the agreement concluded earlier but without the land on which they were located. Over the following years, as a result of PKP S.A.'s actions, the legal status of the real estate (land) was successively regulated, making it possible to complete the whole process. The next step was to decide on the form in which the in-kind contribution would be made, i.e., the separation of the organised part of the enterprise called PKP S.A. Railway Infrastructure Branch. Within the framework of the inventory, more than 34,000 plots of land of a total area of more than 39,000 hectares were separated, mainly representing areas on which lines and railway stations are located, and more than 18,000 fixed assets representing elements of railway lines and such assets as tracks, switches, bridges, switching station buildings, and other stations, platforms, footbridges and underground passages, and associated equipment, such as transmission networks, lighting elements, or technological roads.

"Completion of the inventory of assets constituting the railway infrastructure and the readiness of Polskie Koleje Państwowe S.A. to hand them over is the fulfilment of one of the basic assumptions of the PKP Act of 2000, whose implementation was one of the biggest reforms in the history of the Polish railway industry. Without a shred of exaggeration, it can be said that the tidying up of matters related to the management of railway land and other properties is one of the most significant undertakings implemented by PKP S.A. after 2000 and one of the first and most important decisions of the PKP S.A. Management Board was appointed in 2017. However, it is above all the result of the commitment of many employees, thanks to whom this not-easy process was completed. It should also be added that making a non-cash contribution (in-kind contribution) to the share capital of a commercial law company is an equivalent operation, meaning that the shareholder, in exchange for the in-kind contribution, receives the value of the shares in the company corresponding to the value of the contribution. In this case, PKP S.A.'s share in the share capital of PKP PLK S.A. will increase, which is important, among other things, from the point of view of the development of the PKP Group holding. It is in the form of holding structures, bringing together carriers, infrastructure managers and other entities, that the strongest European railways operate: in Germany, Austria, France or Italy," says Krzysztof Mamiński, President of the Management Board of PKP S.A. and PKP Group.

The next step to finalise the whole process and carry out the in-kind contribution of assets will be its valuation by a professional appraiser. On 23 January, Polskie Koleje Państwowe S.A. (Polish State Railways) announced a tender procedure in the form of an open tender for the performance of a valuation of assets constituting an organised part of the enterprise. The entity with which the contract will be concluded is obliged to carry out the valuation within no longer than eight months. Currently, PKP S.A. and PKP PLK S.A. are also intensifying work on finalising the entire undertaking, including the exclusion from the in-kind contribution of real estate, which is important to PKP S.A. in connection with station investments carried out, participation in government programmes, as well as ongoing and planned development and logistics projects and commercialisation.

Polskie Koleje Państwowe S.A. is the parent company of the PKP Group, which has been operating on a holding basis since 2022. PKP S.A. is also currently one of the largest property managers in Poland – land, buildings, structures and residential premises. PKP S.A.'s assets comprise both facilities performing functions related to rail transport services, such as railway stations, as well as properties of a typical commercial nature.

Source: PKP S.A.