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The Government Seeks Fast Money by Privatizing the State Railways

15 June 2010 / 07:06:27  GRReporter
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The government of George Papandreou is looking for a quick profit with the privatization program for the state railways. This is the opinion of the representatives of the Hellenic Federation of Railway Employees, who met with journalists to shed light on the problem of the national railways. Based on the latest data of the Ministry of Finance the railroad transport in Greece registered a deficit of almost 10 billion Euros.

According to the trade union there are several major causes for accumulation of the huge debt of the state railways. The first and main reason is the failure of state obligations under the plan for public investment. The railroad administration was obliged to be credited by other financial institutions with the guarantee of government bonds, instead of allocating the budget subsidies to it according to the law on public investment. As a rule, if 50 percent of investments were allocated from EU funds for financing a project, the other 50 percent should come from government investment. The money from the state budget, however, was replaced with loans from various banks and private investors in particularly adverse conditions. The result is that the deficit of the state organization has grown threefold for a period of seven years from 2003 to 2010.
The second reason for the financial collapse of the state railways are the inadequate pricing policies of the various governments through the years. “For years, the various governments appointed executives and officials who have no experience in the management of railways,” said the president of the Federation Nikos Kyutsukis. He did not hide his disappointment at the way the state company was managed and said that political games have prevailed over public interests. Nikos Kyutsukis cited the multiple complaints of the federation against the  scandalous treaties, such as the one for the purchase of spare parts which was made contrary to the rules of transparency and accountability, as well as the performed research for millions of Euros for the rail track Egnatia in western Greece without an approved building project by the Ministry of Transport. The Federation has informed the competent services for other violations relating to the financial management of the state railways, but none of them has developed into an investigation of corruption, said the union leader.

The alternative to this privatization plan is the proposal of the railway employees for putting into operation the already established rail links between ports and industrial centers in the country. Where, however, there are not train lines the staff of the state organization can construct rail links without selling separate sections of the national network in pieces.

”Rail transport in the country must be restructured, but to ensure its proper functioning a single organism is required to remain” said Nikos Kyutsukis explicitly. He also said that the organization has the right human resources and personnel for the construction of the necessary trails, provided there is political will and foresight to do so. The president of the Greek railway employees set as an example the bringing into operation of the rail link to Piraeus port, which can provide a freight volume of 300,000 cargo containers and bring a profit of 90 million Euros as daily revenue for the state. Today, the revenue from rail freight in the country is almost nil, explained Kyutsukis. “The railway connections to industrial zones and ports in Greece have to be a priority today. These revenues can be completely absorbed by the public sector and can open up new jobs in the field instead of giving the project in concession in which way the government receives only 30%-40% of the total revenue,” he said.

The Federation stated that the vital rail link Patras-Athens-Thessaloniki-Evzonon is fractioned into separate sectors and the billions of Euro subsidies poured in the years have disappeared as sand in the toes of former governments. In a report presented by the unionists the completion of this rail link, which is defined as the transport backbone of Greece, will provide stable revenue for the state in the future. In their view, privatization of state railways is quick and irresponsible decision that will not lead to improvement in train transport services.

Tags: EconomyCompaniesPrivatizationState railways
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