Waiting for Mr. Bloomfield

Recent developments, deteriorations and devastations of Polish railways

Adam Fularz

The threat of general strike of Polish railwaymen in December 2003 caused the last large public debate about the future of the last polish monopoly from the era of planned economy. Polish State Railways were publicly accused of bad management, wastefulness and prohibitive track access charges, that were thought to eliminate potential competitors (PKP daughter companies mostly are not paying these charges). The political situation in Poland is largely unsuitable for profound economical changes in the railway ownership structure, but the accelerated decline of publicly owned and badly managed company might be the impulse needed for changes. Unfortunately, politicians are afraid of changes and cannot openly oppose to powerful trade unions, that already two decades ago dominated the PKP. Today the remnants of PKP consist of in average 22-years old passenger coaches and not any younger freight wagons, of which the half of the stock is devoted for transporting coal.

Table 1. The extent of freight services performed by licensed rail carriers on national rail infrastructure of PKP Polskie Linie Kolejowe S.A.
nr, Name of the carrier, Quantity of train-kilometers performed in 2003 on public rail infrastructure managed by PKP PLK S.A.

1. Zec Trans Sp. z o.o. 13 754

2. Pol-Miedź-Trans Sp. z o.o. 227 011

3. "Kolex" PPUH Sp. z o.o. ..

4. Chem Trans Logistic Holding Polska 598 011

5. "Nadwiślański Zakład Górniczego Transportu Kolejowego" Sp. z o.o. 3 422

6. Transoda Sp. z o.o. 47 322

7. "Lotos Kolej" Sp. z o.o. 20 704

8. PKP Cargo S.A. 95 542 431*

9. "Sped-Kol Blachownia" Sp. z o.o. 7 199

10. Coaltran Sp. z o.o. ..

11. Kopalnia Piasku "Kotlarnia" S.A. 84

12. Przedsiębiorstwo Transportu Kolejowego i Gospodarki Kamieniem Sp. z o.o. w Zabrzu 328 318

13. Kopalnia Piasku "Szczakowa" S.A. 363 032

14. Przedsiębiorstwo Transportu Kolejowego i Gospodarki Kamieniem S.A. 182 929

15. Zakłady Inżynierii Kolejowej S.J. 43 128

16. "Tankpol" Sp. z o.o. ..

17. PKN Orlen S.A. 57 247

18. Zakład Górniczo-Energetyczny Sobieski Jaworzno III Sp. z o.o. ..

19. Euronaft Trzebinia Sp. z o.o. ..

20. Maczki Bór S.A. 40 247

21. Kopalnia Piasku "Kuźnica Warężyńska" S.A. 16 233

22. Kolhut Sp. z o.o. ..

23. Przedsiębiorstwo Robót Kolejowych i Inżynieryjnych 27 547

24. Kolej Bałtycka S.A. ..

25. Przedsiębiorstwo Usług Kolejowych Kolprem Sp. z o.o. ..

26. Orlen KolTrans Sp. z o.o. ..

27. Koleje Śląskie Sp. z o.o. ..

28. Lubelski Węgiel Bogdanka S.A. ..

29. DEC sp. z o.o.** 502

*data for 2002
** no licence as for February 2004
... not operated on public infrastructure in 2003, therefore no data
Source: Data obtained from spokesman office of PKP Polskie Linie Kolejowe S.A.

Table 2. The extent of the services performed by PKP daughter companies on the infrastructure of Polskie Linie Kolejowe S.A. in 2002
* approximation, full data were not published
** only on PLK infrastructure, own lines not included
*** operations on own infrastructure only

Source: Siewiera Grzegorz, Wzajemne relacje pomiędzy spółkami PKP Polskie Linie Kolejowe S.A. i PKP Przewozy Regionalne Spółka z o.o. w Grupie PKP - teraz i w przyszłości, referat konferencyjny, Warszawa, 6 maja 2003.

Polish railway infrastructure is managed by PKP Polskie Linie Kolejowe S.A., but this infrastructure management company is still controlled by PKP S.A. itself. This situation might be the cause for lack of real competition in Polish railway market, that is still nearly completely predominated by PKP and its daughter companies (see Table 1 and 2).

The only serious competitiors are (in 49 % PKP-owned) company Chem Trans Logistics and independent industrial freight companies, that nearly all are situated in Upper Silesia Coal Basin. In passenger services there are is one private operator (PCC Arriva serves local lines in Kujawsko-Pomorskie) and only two local networks of lines (in Śmigiel area in Greater Poland and in Krośniewice area in Central Poland), that both have seen their passenger quantities rising since the lines were taken over from PKP (in the first case, passenger number rose by 270 %, in the second case by 80 %). The change of train operator is possible only on communal lines, previosly owned by PKP but abandoned in 2001 and transferred to local governments. Only around Warsaw there are three communal operators serving regional lines: SKM, WKD and KM.

Dominance of public sector continues because of the fact that the high charges demanded by PKP are prohibitive in Polish conditions and seem to serve as a kind of barrier to any attempts of market entry. Besides, these two small private passenger services (operated by SKPL) were refused the public subsidies for passenger services (300 million PLN in 2003 and approx. 550 million in 2004) and have had multiple problems in gaining a license, so that they could legally operate on their local lines. As for March 2004, the company still had not obtained the compulsory license issued by Polish rail authority UTK.

Interestingly, PKP daughter companies, such as PKP Przewozy Regionalne (passenger traffic) and PKP Cargo (freight traffic) do not always cover track access charges because of their deep financial problems. In fact, PKP Przewozy Regionalne is not paying at all and had a cumulated debt of 1,2 billion PLN to the infrastructure manager, that was recently exempted (in exchange for the promise of contituation of the “reform programme”). Summing up, the conditions for market entry are so constructed, that unequal treatment to newly entering companies makes it impossible to offer competitive services because of very unequal conditions for competing parties. The 17 freight carriers that are using the rail infrastructure of PKP Polskie Linie Kolejowe are fully covering their charges, but stat-owned companies can obtain an "exemption".

The decline of passenger traffic is progressing, and PKP is offering approx. 3500 regional trains daily, although to have a level of service comparable with Czech Republic, there should be at least 21 thousand of passenger trains daily. The quantity of passengers carried by Polish railways diminished to the lowest ever level in its history: in 2002 only 244,1 million of passengers were carried, whereas in early 1980-ties the level of passenger service amounted to approx. 1100 million passengers carried.

Since early 1980-ties PKP become something compared to state-in-state company, that disposed with its own resources and was powerful enough, so that it could oppose to government policies, what resulted in shortages of financial support for rail services. The political economy of this branch of Polish economy was one of the reasons that contributed to the accelerated decline of the communism, and according to scientific dissertation of Mr. Jerzy Hausner, (actual Head of the Ministry of Economics), the situation in PKP could not be controlled already in late 1980-ties.

According to prof. Rydzykowski, PKP had the smallest work efficiency ratio in Europe. It employed at the time of fall of communism 400.000 employees, and could not reduce overmanning quickly enough in order to adapt to changements in economical surrounding. The overmanning was so immense, that the local passenger network around Krośniewice, that in deep communism employed 114 workers, today offers the same schedule with only 9 workers, but it is managed by private company SKPL. Fatal managerial practices (railway management, because of its complexity, usually requires more than average managerial capabilities, that are usually scarce in government-owned organizations) led to the acceleration of decline.

The fleet was completely unadapted to needs of modern railway services, what is especially visible in passenger services. Whereas in Czech Republic nearly 47 % of passenger services were performed by DMUs, in Poland this ratio was in late 90-ties only 0,2 %. The use of outdated rolling stock directly resulted in infrequent (3 services daily), slow services, that could not be operated efficiently. These effects only resulted in further deterioration of passenger services. From the passenger network length of 26228 kilometers of tracks, that was in use in 1990, only approx. 14 thousand are in use today, and additional reductions are planned. The term "in use" is probably an euphemism, for the fact that the services in rural areas are very infrequent, and passenger trains that run only twice daily are the last remnants of originally dense schedules.

These last services are dedicated to specific groups of passengers, such as railway workers and beneficients of discounted fares. According to data collected by the authorities of the Voivodeship of Lebus (województwo lubuskie, located next to the German border) in some trains approx. 70 % of passengers possessed the free-travel tickets issued for PKP -staff. Approx. 20 % of customers counted in PKP statistics as passengers are in fact PKP workers and this number should be substracted from the figures announced by PKP, that used to differ with those published by UIC.

Most of former rail passengers switched from rail to regional bus services. This tendency is especially visible in urbanized areas, such as Upper Silesia Coal Basin (Górnośląski Okręg Przemysłowy), where the share of rail in public transportation is only 4 % and, when mass motorisation included, amounts to only approx. 1,5 % of total. In this higly urbanised area the originally ambitious rail construction works (rail infrastructure was planned to be upgraded and transformed into a service called KRR: a type of dense S-bahn services, a kind of Tyne-and Wear Metro in Poland) were stopped and abandoned shortly after the fall of communism, and today only unfinished bridges and viaducts survived.

Scarce passsenger trains are dirty, unsafe, slow, infrequent and mostly empty, and the traffic changed for busses, that operate in unified, common ticket union (KZK GOP, an organisation that works on behalf of local governments and puts bus services into open tender procedure), whereas the train tarrifs are not included in this agreement. If such agreements were introduced (Warsaw area, Upper Silesia Coal Basin), they were only trials and were often discontinued shortly after being introduced in recent years. In Warsaw such agreement was recently renewed, but rail usage is still scarce.

The financial defeat of PKP "reforms" is no longer a secret. The debts have in 2003amounted to PLN10,8 billion, and were mostly caused by passenger services and staff reductions payments. Last reforms programme, that was accepted by Polish government in December 2003 ordered that all passenger regional services should be transferred to regions and that the PKP Przewozy Regionalne, the monstrous and unmanageable company that emerged after PKP reorganisation in 2001, will be splitted in 16 smaller regional companies. Till now only three regional authorities expressed the intention to create own companies, but some followers are probable. By 2008 this programme is still coninued, and only one such company was established: KM (koleje Mazowieckie) to serve Warsaw traffic. Recently the idea was changed to transfer shares of PKP Przewozy Regionalne, state-owned monopoly, to local governments.

The idea of splitting PKP was presented in the first independent report on this branch of economics ("Polish railways and the case of PKP") that was published in July 2003 and resulted in a wave of press articles on that subject. The report from 2003 proposed mass reductions of PKP workers (108 thousand), privatisation and final closure of remaining parts of PKP combined with tranfer of remaining property to regional authorities. The report, that briefly presented all the efficient rail reform approaches in Europe and finally proposed radical changes in Polish rail market, was accused by PKP managers as "offensive and aggressive", maybe because it accused them of ineptness, incompetence and finally, proposing simply to "disperse" them.

Concluding, PKP decline was not yet slowered. More radical approach, that could be seen in government wass only expressed by Mr. Hausner (Head of the Ministry of Economics in 2003), and the rest of politicians are rather stagnant and unwilling to change, probably being afraid of trade unions reaction. Most politicians are well informed about the situation, what probably resulted in recent change of governement policy. Recent press publications well cover this subject, but are afraid of indicating huge staff surpluses within the company. Japanese study on PKP privatisiation, that was recently finalized by Mr. Suga, reported that 60 thousand of staff should be laid off. The report mentionad above indicate, that basing on 2002 data even 108 thousand (of 145 thousand in total) should be laid off, when PKP should be as efficient as an average European rail operator.

Although the prospects of status-quo continuation signify nothing else than further deterioration, Polish politicians are still waiting, and rail privatisiation is invariably from early 1990-ties only an empty slogan in their mouths, that should feed the public. In fact only the lines abandoned by PKP were "privatised", i.e. mostly dismantled by thieves that stole all the metal parts of tracks (rails, and even bridges). New operators are being rather an unique exception to this sad rule of "privtisation by dismantling" in a country, where the average unemployment rate recently reached 21 % and in some areas even over 35 % of population were having no permanent work place, so that an opportunity to dismantle a railway line is a sole possibility of having some occupation. Recently even PKP trade unions were allowed to dismantle abandoned rail lines, in order to have an occupation, and provided a subsidy from state budget that was higher that the total governement investments in upgrading of Polish rail network.

Even local railway lines in densly populated areas were dismantled when unendlessly "waiting for privatisation". This happened in Koszalin, where three rail operators were competing to take over from PKP an abandoned suburban rail line, but within the three-years period of bureaucratic maneuvres (PKP is mostly unwilling to transfer its property to anyone) even the fairly decent railcars that were waiting in sheeds for the arrival of new operator were dismantled into pieces, with all the metal parts stolen.

One could wonder- such a devastation and generous wastefullness in such a poor country. Maybe Polish politicians are waiting for so long for the arrival of the mythical Mr. Bloomfield from New York, that, accouring to a novel by Joseph Roth, entitled "Hotel Savoy", was a mysterious foreigner who was bringing prospects of hope and better future to this land so painfully experienced by its history. Naturally, everyone wanted to see him and hpoed a lot from his visit. In the roman of Roth roman Mr. Bloomfield in fact did come, but only for a while, to see his gradfather’s grave. Although Mr. Bloomfield did not change anything with his arrival, the hope for change reminded.

Posted by Adam Phoo on 06:15. Filed under , , , , . You can follow any responses to this entry through the RSS 2.0

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