The Reforms of Poland's State Rail Company PKP - the Total Failure or a Good Example for Other Countries?

The Reforms of Poland's State Rail Company PKP - the Total Failure or a Good Example for Other Countries?


A Prokopowicz, University of New Orleans, US


The paper will address the path of the Polish rail reforms and provide an answer why it is as it is.


About ten years have passed since Poland has embarked on a complex and revolutionary changes of its state railroads. The initial reform program was published in 1999 by then trade union Solidarity-led government. It involved many drastic reformatory measures. The major objective of these measures was to decrease the state budget involvement in funding the railroad. The course of the reforms was to combine the U.S. and the European rail development and management approaches. The program involved dividing the state company in a number of joint stock companies, employment restructuring (in fact significant lay-offs), privatization of major joint stock companies (none privatized so far), financing restructuring (the newly created joint stock companies inherited 10 billion Polish zloty debt (3 billion euro) from the state enterprise PKP), real estate restructuring (only a small portion of rail real property has been sold until 2011). There were several major updates and changes to the initial plan in the period 1999-2011 addressing mainly the issues of privatization, employment, and state subsidies to PSO (Public Service Obligation) regional rail services, and state subsidies to IM (Infrastructure Manager). The current (2011) situation of the railroad has not significantly improved. The TAC (Track Access Charges) are one of the largest in the European Union, EU supported infrastructure projects have not been sufficiently completed, privatization seems to be still slow or non-existent, the debt of the railroad has been reduced but is still significant. Rail becomes less and less competitive with road transport. The paper will address the path of the reforms and provide an answer why it is as it is. The author will identify economic, management, financial and political factors which resulted in lack of accomplishment of the objectives of the 1999 Rail Reform Program for more than 10 years. The paper will provide a list of pros and cons in reforming post-communist railroads. It will also address the role of the state and the private sector in these reforms. Institutional aspects of the reforms will be addressed. The results of the experimental move of the PSO rail regional services to regional governments will be assessed. The implementation of EC directives regarding competition in the rail market will be discussed. The paper will conclude in recommendations on further path of Poland?s in rail reforms, role and assistance that EU can provide to complete this process, participation of financial institutions, and policy of Poland?s state and regional governments. Finally, financial requirements for successful completion of the reforms will be identified in terms of the necessary budget expenditures.


Association for European Transport