GERMANY: Chancellor Angela Merkel confirmed on April 28 that a government committee had endorsed plans to sell an initial 24·9% stake in Deutsche Bahn to the private sector, with the process due to be completed ahead of national elections scheduled for September 2009.

Previous attempts to persuade the left wing of the Social Democratic Party to support a partial privatisation of DB all failed, but on April 13 Federal Transport Minister Wolfgang Tiefensee finally reached agreement with SPD representatives, cutting the proportion to be sold from 49·9% to 24·9%. SPD leader Kurt Beck had been holding out for regional and local passenger services to be excluded from the sale, a move opposed by Merkel, Tiefensee and Finance Minister Peer Steinbrück. The SPD had also called for non-voting shares to be issued in an attempt to prevent private sector investors from exerting too much influence on railway policy.

Following a six-hour meeting on April 13, the SPD’s coalition partners in the Christian Democratic Union welcomed the compromise as a ‘good basis’ for agreement. The current proposals envisage the setting up a holding company in which up to 24·9% of DB’s passenger, freight and logistics businesses will be structured for sale to private investors. Crucially, a separate state-owned company within the holding group will take ownership of track, stations and power supply; earlier attempts to include infrastructure in the sale had fallen on a constitutional hurdle requiring ownership of the network to remain in state hands.

The CDU hopes that it will be possible to sell a further tranche during the term of the next government, and DB Chairman Hartmut Mehdorn says he would eventually like to see 49·9% of DB shares in private hands. In the meantime Tiefensee is selling the compromise as ‘decisive progress’ that will open the door to private capital being made available for the rail business. ‘Investment needs are huge’, he said on April 15, noting that ‘considerable sums’ had been spent on the rail network, but that speed restrictions showed that yet more was needed. Proceeds from the sale are expected to be split, with one-third to fund DB investment, one-third for infrastructure works and one-third going into the government’s coffers.

In a position statement dated February 29, the government has set out its objectives for the rail sector, which include reducing noise, raising energy efficiency and making improvements to stations. The statement says DB must be given the means to compete in the European market, while at the domestic level there is a commitment to ‘secure contractually the size and quality of the network’. There is also a promise that the federal government will remain the majority shareholder.