German Rail Industry Workshop on South East Europe

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German Rail IndustryWorkshop on South East Europe
Gavin Anderson
Director
Infrastructure Business Group
Berlin 2003
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Contents

• 1. EBRD and the railway industry
• 2. Economic transition in the rail industry
• 3. Private sector opportunities in railways
• 4. Future directions
• 5. Contact details

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1.1 Introduction to EBRD

• Key facts about EBRD
• International financial institution founded in
  1991, owned by 62 national and supranational
  shareholders, including EU
• Promotes market-based economies in 27 countries
  in Central Eastern Europe and the former Soviet
  Union
• Provides finance to public and private sectors

Cumulative commitments 21.6 billion
Unaudited December 2002
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1.2 EBRD and the Railway Industry

• EBRD is a major financier of the railway industry
  in its region of operations
• The Bank has approved 24 railway projects in 17
  countries with Loans totalling over EUR 1.2
  billion
• Those countries carry over 95 of rail traffic in
  the region
• Total value of the supported rail projects is
  about EUR 3.5 billion equivalent

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1.3 Rail Projects in South East Europe
(EUR 260M)
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2.1 Transition in the Railway Industry
EBRD Objectives

• Separation of policy and regulatory functions
  from commercial operations
• Restructuring railways on business lines
• Budgetary compensation for public service
  obligations
• Challenging business plans to improve service and
  efficiency
• Greater role for private sector in railways

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2.2 Separation of Businesses

• Breaking down monolithic railway companies into
  business lines is essential
• Freight, passenger and network businesses have
  different market needs and different business
  processes
• Separation clarifies economic performance and
  permits reduction in cross-subsidy
• Non-core businesses that divert capital from core
  businesses, and can be more efficiently
  outsourced, should be divested
• Railways in South East Europe are seeking
  structures and processes which will
  improve performance

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2.3 Planning the Businesses

• Need for rigorous rolling medium term plans (3-5
  years)
• Realistic traffic projections
• Productivity targets aimed at European norms,
  including labour restructuring programs where
  necessary
• Improved asset utilisation
• Prioritisation of capital expenditure with
  realistic and fundable programmes

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3.1 Longer-term Opportunities for Private Sector
in South Eastern European Railways

• Railway supply industries (locomotive wagon
  repair, track maintenance)
• Rollingstock leasing (finance leases,
  availability contracts)
• Specialist businesses (railway telecommunications,
  freight terminals)
• Freight companies (privatised freight operations,
  open access freight operations)
• Passenger concessions/franchises

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4.1 EBRD Possible Future Directions Rail

• Follow-on sovereign operations (e.g. Romanian
  Stations, Croatian train control systems)
• Finance without sovereign guarantees to viable
  state companies
• likely to be longer term in South-East Europe
• corporatised entities (e.g. Romanian Freight
  Company) could provide opportunities
• Loans/investments to private participants in the
  industry
• international investors in railway supply
  industries
• open access freight operators/passenger
  concessionaires
• supply of rollingstock leasing companies

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4.2 Why work with the EBRD?

• Appetite for risk
• Flexibility of financing approaches
• Specialist financial and railways expertise
• Local presence (30 offices in 27 countries)
• Capacity to mobilise co-finance

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5.1 Contact Details

• Gavin Anderson
• Business Group Director
• Tel [phone]
• e-mail andersog_at_ebrd.com
• Mr Paul Amos
• Deputy Director Transport
• Tel [phone]
• e-mail amosp_at_ebrd.com

• Riccardo Puliti
• Director Transport
• Tel [phone]
• e-mailpulitir_at_ebrd.com
• Mrs Agnieszka Lukasik
• Principal Banker
• Tel [phone]
• e-mail lukasika_at_ebrd.com

EBRD One Exchange Square London EC2A 2JN