FINANCING arrangements for the restructuring of French National Railways’ loss-making freight business were approved by the European Commission on March 2.

The three-year restructuring plan, which includes productivity and performance improvements, is intended to restore Fret SNCF to profitability by the end of 2006 (RG 3.05 p141). It was referred to the Commission under EU regulations on state aid payments. Total cost is put at €1·5bn, of which SNCF will raise €700m through asset sales and the French government will contribute ’a sum not exceeding €800m’.

The approval is dependent on ’certain conditions’ providing for a reduction in Fret SNCF traffic volumes and for faster opening up of the French rail market to competition. Transport Commissioner Jacques Barrot commented that ’Europe needs efficient, competitive rail freight. Today’s decision will enable Fret SNCF to become viable again, in a more open market.’

The government has agreed to link the payments to market deregulation, with the second instalment conditional on opening up of international routes through France and the third on liberalisation of the domestic market by March 31 2006 at the latest. After this, the freight operator will not be able to apply for restructuring aid for 10 years, if it remains under SNCF control.