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Railway bomb of the election campaign in the Czech Republic: The parties propose the privatization of the state railway carrier

Railway bomb of the election campaign in the Czech Republic: The parties propose the privatization of the state railway carrier
photo: Archives/Railway bomb of the election campaign in the Czech Republic: The parties propose the privatization of the state railway carrier
31 / 08 / 2021

In an interview today, the shadow minister of finance for the “ODS” political party, Zbyněk Stanjura, announced his intention to privatize České dráhy (ČD Cargo), the state-owned railway carrier. According to him, the state carrier should function as a joint-stock company listed on the stock exchange. Part of the stake would be sold to investors. The privatization of the state carrier ČD Cargo is also proposed in its program by “Přísaha”, new found political party. Their plan is to sell one third of the shares of the railway company to private hands.

Privatization of the national carrier has been a dead topic in the Czech Republic for several years. It was last discussed in 2018. At that time, the then Minister of Transport Dan Ťok (for political party ANO) announced that he was going to enforce the sale of a minority stake in the freight railway carrier ČD Cargo. However, the privatization was uncompromisingly stopped by Prime Minister Andrej Babiš. He blasted Ťok's plan live in the discussion program “Questions of Václav Moravec”.

"We will not privatize ČD Cargo. I am definitely against it, "Babiš said on the “Česká televize”, national TV provider’s program. According to him, the state manages its companies well. "I don't know why Tok said that," the prime minister shook his head. Minister Ťok then resigned a few months later and the topic completely subsided.

However, the privatization of the state carrier is now returning to the game as part of the current election campaign. The possibility of privatizing Czech railways (České dráhy) was proposed by two political parties. These are the “ODS” and the “Přísaha“. Both aspire to sit in the next government. Their comments must therefore be taken very seriously.

Probably the strongest statement on this topic was given today in the daily newspaper “E15” by the shadow Minister of Finance Zbyněk Stanjura. In 2012 and 2013, he was Minister of Transport in the government of Petr Nečas. He thus had both state-owned enterprises on his agenda. The potential future Minister of Finance (or also the Minister of Transport) would prefer a model where České dráhy would be listed on the stock exchange as a joint-stock company. According to him, some percentage would then be sold into private hands.

The second political party that proposes a reorganization of the state carrier in its election program is “Přísaha”. They are a black horse in the upcoming elections and is widely expected to enter into negotiations on a future government. Robert Šlachta's party proposes removing ČD Cargo from the ČD group. Subsequently, shareholders are to be allowed to enter ČD Cargo through the issue of shares. According to the Přísaha's proposal, such a step should help in debt relief to the company. The state should retain a controlling interest of 67% of the shares.

The Rail Target editorial addressed railway expert Radek Rybáček with questions regarding the privatization of České dráhy. For several years he was the head of the Eastern European division of the privatized French fleet of SNCF wagons.

"The idea of ​​privatization is certainly right. This is a general trend. It turned out, for example, in the French SNCF, where I worked. State cargo can never be as flexible as the private sector, "said railway expert Radek Rybáček.

However, he is critical of some proposals. "The key is to look for a strategic partner for Czech cargo who will help with international expansion. However, a true strategic partner will not be satisfied with just a third of the share, as suggested by “Přísaha”. A realistic scenario is that the majority stake will be sold to the investor. The state should retain a minority controlling stake with a gold share”, Rybáček analyzes the proposals.

According to the expert, ČD Cargo primarily needs to increase its competitiveness compared to large groups in neighboring countries. "The ÖBB Group controls the west-east corridor through Austria and Hungary. On the other hand, the PKP Cargo Group serves the northern axis via Poland to Germany. The Czech carrier must compete directly with these giants. Therefore, it is necessary to look for a strategic partner that would allow ČD Cargo to compete on these transnational routes, " stated Rybáček for RT.

Rybáček also considers the use of the obtained funds to be crucial: “For example, they should be invested in the purchase of wagons and locomotives. Certainly not to pay off old debts. It will be a one-time means that the company should be kicked off with. We need to focus on development. It is a Czech golden egg that needs investment. "

The topic of privatization of state-owned transport companies is also a live issue in other countries in Central and Eastern Europe. At the end of August, the European Commission approved a new joint venture between the Slovenian state carrier Slovenske Železnice (SŽ) and EP Logistics International, one of the companies of the EPH holding owned by Daniel Křetínsky.

We will keep an eye on the topic also in the upcoming days.