Report lays out plans to reorganize debt-plagued French rail system

April 24, 2013 at 12:03 AM
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PARIS, April 24 (UPI) -- A report issued this week calls for reorganizing France's state-owned SNCF railway and debt-plagued rail system owner RFF under new public entities.

The recommendation came Monday as part of a report submitted to French Prime Minister Jean-Marc Ayrault by former Education Minister Jean-Louis Bianco, who had been commissioned by the government to find ways to relieve RFF's $41 billion debt burden and improve the country's costly and inefficient rail service.

Bianco, a Socialist Party National Assembly member who served in the Cabinet of President Francois Mitterand in the 1990s, said cost savings generated through combining operational units of the two entities under the umbrella of the state could eliminate the debt after 10 years.

The report will serve as the basis of legislation to be presented to the assembly by the second half of this year.

RFF, a publicly subsidized company created in 1997 in a privatization move, owns France's railway network, while SNCF operates the trains. But it is incurring annual operating deficits of $2 billion, which Bianco said could soon escalate to $2.5 billion per year if nothing is done.

The recommendations generally call for greater involvement of the government, both at the state and regional levels, in the finance, control and direction of a reunified rail system, Le Monde reported.

That has generated complaints from government opponents that the move is motivated by the ideological preferences of France's Socialist president, Francois Hollande.

But Bianco said the real motivation is the need rescue a rail system that is drowning in red ink and fails to meet the needs of the country's shippers and travelers.

"Meeting the needs of all stakeholders is not an ideological choice," he said. "This is a necessity. Rail transport specifically requires close and constant cooperation between the network operator and the companies that use rail."

In calling for the recommendations last year, French Transportation Minister Frederic Cuvillier said the current ownership separation of rails and trains has produced an untenable situation of confused lines of authority.

"What users want is a system that works and does not have this Kafkaesque and grotesque character with a separate infrastructure side managed by the operator, in which there is a lack of clarity and uncoordinated duplication," he said.

Under the recommendations, RFF would be folded into a new entity known as an EPIC by its French acronym, meaning a public industrial and commercial company, which would give it the financial security of the state.

This "manager of the unified infrastructure" would consist of RFF, the Department of Railway Circulation -- which is responsible for train traffic and circulation management under RFF -- and branch railway infrastructure.

A second EPIC would include the current operating activities of the SNCF, while a third would be created to provide a "parent institution" meant to oversee the other two.

The moves would run counter to the European Union's Fourth Railway Package, which focuses on deepening the interoperability of national systems and opening government-owned rails to competition in 2019.

But Bianco told the Paris daily Liberation his conversations with European Commission officials have convinced him the proposals would pass EU muster.

"I had many discussions with Brussels," he said. "They admitted that there could be ... an integrated model like the one we recommend that does not hinder the opening to competition."

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