WITH ACCESSION to the European Union top of the agenda in Eastern Europe, delegates to Terrapinn’s Central & East European Rail 2003 summit in Budapest on November 27-29 were warned not to make the same mistakes as railways in Western Europe.

Jean-Arnold Vinois, Head of the Railway Transport & Interoperability Unit at the Directorate-General for Energy & Transport in the European Commission, made a point of comparing the performance of railways in Eastern and Western Europe. For ’interurban’ passenger traffic, rail typically had a market share in the EU of 6 to 7%, significantly less than the 10% found in the CEE countries. With freight traffic the corresponding figures for 2002 were 13% for the EU and over 38% in the CEE group. ’The challenge’, he said, was ’to keep that share at around 30%’.

In a further comparison, Vinois warned about the need for CEE countries to raise productivity. Whereas in the 15 EU member states 700000 people were employed as railway staff, in the 10 candidate countries there were 500000. But productivity was markedly worse in the East, with the number of traffic units (passenger-km + tonne-km) per employee being 0·7 million in the EU against 0·3 million on CEE railways. Christopher Hurst, Director, Infrastructure Department, at the European Investment Bank, also noted that traffic units per employee in Poland just topped 0·4 million, but in Hungary and the Czech Republic barely reached the 0·3 million mark.

Vinois had some sobering words about the enlargement of the EU. ’This is about reconstructing a continent destroyed by war’, he said, adding that ’the European project is the best project for humanity’. Noting that rail schemes may qualify for EU funding, he said that ’railways have to demonstrate that they deserve to have a lot of money to finance their investment’.

In the so-called København Package worth €21·7bn for ’structural action’ in 2004-06, €3·5bn could be available for transport projects as part of the Cohesion Fund. Hurst suggested that as much as €25bn could be invested in rail in the CEE countries in the next decade, but he warned that this would only happen if projects were well-prepared in technical, economic and environmental terms - and were implemented efficiently. He identified a possible major role for leasing companies to fund rolling stock acquisitions, a view underlined by the presence of a strong team from UK-based Angel Trains; Managing Director Haydn Abbott told delegates that his company had invested more than €400m outside the UK and was already ’the largest lessor of locomotives in Europe’.

Paul Guitink from the World Bank underlined the need for reform if CEE railways are to survive the more competitive environment that will follow accession. He called for the separation of market and social roles played by rail. The first priority, he said, was to stabilise the business, focusing on institutional reform, market responsiveness and rehabilitation of main lines. He also stressed a change in the World Bank’s policy so that it increasingly funded the social cost of rationalisation programmes, whether through retraining or other policies aimed at cutting staff numbers.

Rudolf Mertens, Director, International Co-ordination, at German Railway, suggested in his presentation on lessons learnt from restructuring that no less than €27bn would be needed for investment in the rail infrastructure of the 10 CEE countries by 2015, of which nearly €10bn would be required in Poland alone. He stressed that access to private capital was essential for railways to be able to grow, pointing out that ’fitness for the capital markets opens up entrepreneurial room for manoeuvre beyond the realms of political interference’.