PKP Cargo Faces Collapse: Polish Rail Experts Demand EUR 650 Million Lifeline

PKP Cargo continues to struggle in crisis, primarily due to the sharp decline in coal transport volumes. The Polish Association of Railway Experts and Managers (SEIM-TSZ) therefore calls on the government to help the company with a financial injection.

SEIM-TSZ has appealed to the Minister of Infrastructure, Dariusz Klimczak, with an urgent request for the government to provide PKP Cargo with financial assistance amounting to EUR 650 million. According to the association, such support would ensure the company’s cash flow, allow partial debt repayment, cover losses caused by the downturn in coal transport, and finance basic maintenance and investment projects. Moreover, it would enable PKP Cargo to compete in new transport segments beyond coal.

The SEIM-TSZ's Proposal to Save PKP Cargo

According to Kolejowy Portal, SEIM-TSZ also demands that the government actively develop new freight transport segments. Specifically, they suggest implementing mandatory transport of aggregates and bulk materials via rail. Currently, a significant portion of these goods is transported by road, causing financial losses for rail operators and damage to public road infrastructure.

Polish Ministry of Funds and Regional Policy meets to tackle freight rail challenges. PKP Cargo to expand intermodal transport, but industry warns coal shipment loss won't be easily offset.

— Hashtag Poland (@HashtagPoland) November 7, 2024

The association points out that public support could take the form of writing off PKP Cargo’s debts owed to PKP PLK for rail infrastructure usage fees. Experts argue that such a write-off is inevitable, as PKP Cargo cannot realistically repay this debt. Additional support could be provided by PKP S.A., the parent company, which has financial surpluses and borrowing capacity. However, this method would require notification of public aid to the European Commission. This has precedent in Poland: a few years ago, the government successfully secured EU approval for restructuring aid to PKP Przewozy Regionalne (now Polregio), which has since thrived in the regional passenger transport market.

Coal Transport Decline and PKP Cargo’s Crisis

Experts note that Poland’s Minister of Industry, Marzena Czarnecká, is in advanced negotiations with the European Commission for notification of EUR 1.74 billion in subsidies for coal mining. PKP Cargo's challenges, stemming from a significant and sustained drop in coal transport demand, are a direct consequence of economic decarbonization. Therefore, support for restructuring the mining industry should also encompass aid for PKP Cargo, presented in a manner acceptable to Brussels.

The SEIM-TSZ notes that Germany's DB Cargo has received government aid approval totaling EUR 1.98 billion. They argue that similar aid for PKP Cargo would ensure fair competition in the European rail freight market.

About SEIM-TSZ

The SEIM-TSZ consists of experts with in-depth knowledge of rail transport operations and extensive experience in managing transport companies and rail infrastructure entities. Currently, the association has 130 members, including a former Minister of Transport, two former Deputy Ministers of Railways, a former president, and two vice presidents of the Rail Transport Office. It also includes 75 current and former CEOs, board members, directors of Poland's largest rail companies, middle management, and other senior professionals. The SEIM-TSZ collaborates with the Sejm Infrastructure Committee, the Sejm Legislative Office, the Rail Transport Office, and the Polish Chamber of Commerce.

Source: Kolejowy Portal; SEIM-TSZ