Parliament approves transformation of Czech Railways

Czech Railways, the largest state-owned company in the country, is in bad need of reform. With an annual loss of several billion Czech crowns, the Czech government has made several attempts to come up with a plan to transform the railway network into a more profitable enterprise. Dita Asiedu has more:

On Tuesday, Parliament approved a transformation plan, which splits Czech Railways into two: a state-controlled joint-stock company operating the trains, and a wholly state-owned company maintaining the tracks. According to the head of the railway workers' trade union, Jaromir Dusek, this new plan is a positive step towards improving rail travel:

"I'm certain that because it's going to be a joint-stock company, pressure from passengers, the state, and maybe even trade unionists will be more effective to force the management to be more professional and not dependent on the state - which only provided funding when necessary."

But the former Deputy Transport Minister, Michal Tosovsky, has reservations about the plan. He says as long as there's no economic competition, the planned transformation cannot be seen as a positive step forward:

"It really does not make any sense. You see this split between the tracks and the rest of Czech Railways makes sense when you implement some competition and this is not the case because the new Czech Railways company will also control the tracks. The tracks will be in state ownership but effective control will be held by Czech Railways in the future as well. That means that they will decided who will compete with them so it's not competition at all. This will only have a negative effect from the split itself."

Despite the recent rise in train fares, train travel in the Czech Republic remains substantially cheaper than in most of Europe. Mr Tosovsky, however, says this is a luxury that neither the state nor Czech Railways as a joint-stock company will be able to afford:

"I think there must be a price increase anyhow because the volume of costs is very high but on the other hand railways are expensive. It's an expensive mode of transport, which means that somehow someone must pay it. States will subsidise passenger transport in the future without any doubt but passengers must, of course, also pay more."

Once signed by the Czech President, Vaclav Havel, the transformation plan can go into effect on January 1st next year.