“Recycling the scrap-iron means funding for the rehabilitation process”

interview with Mr. Gabriel Ciuca, General Manager of the Rail Assets Management Company SAAF - SA

Managing the surplus of corporate and non-corporate assets, representing the main activity domain of SAAF SA is accomplished by the renting, leasing, selling process, as well as other modalities. Incomes obtained during October 1998 - December 2000 were necessary to support the three railway companies. Mr. Gabriel Ciuca, the General Manager of the SAAf SA will present us the results that have been accomplished by its company during the last three years of operation.

Railway Journal: When first founded, Rail Assets Management Company, there was a certain doubt regarding the importance of founding and developing such a structure. Do you think this doubt is still there, after these two years of operation?
Gabriel Ciuca: The purpose of founding SAAF SA was to turn into a good use the assets which are no longer used by the other railway companies that have been separated from SNCFR. Thus, Passenger Transport Railway Company, Cargo Transport Railway Company and CFR - SA, have been released from the tasks that were considered collateral to their activity domain.
Presently, after three years from the separation process, I can state that 40% of the rolling stock of National Freight Railway Company has been turned into good use by being annulled or rehabilitated and put in use in our home market, as well as on the foreign railway transport market - Iran, Italy, Spain, Germany, Macedonia.
The idea of a supplementary poll that can be brought again on the market represents the activity of supplying the new private railway operators. For now, I think that none of them can afford, financially, to purchase new rolling stock, which gives our company operation a great deal of importance. We have a large demand from those kinds of operators for purchasing, leasing and renting the rolling stock. For instance, to Unicom, which is the shareholder of the private operator named UNIFERTRANS, we have rented 100 tank -wagons. Other 100 cistern - wagons we have sold to Granpet company, which is also the owner of Simeria Railway Wagons Repairing Factory, and I would also mention SEFER company with whom we are discussing the possibility to take over in leasing or to purchase a big number of locomotives.
So, finally, SAAF is the greatest source of supplying private operators or the other companies in this field of activity with rolling stock.
R.J: Among the current activities of the company is there also included the participation to joint ventures? What can you relate us about this orientation?
G.C.: Starting with last year joint venture type companies of SAAF became effective, having the purpose to lease rolling stock and intermodal transport. Presently, our society collaborates with other four joint ventures: TOUAX-SAAF; WAGON LEASING; ICA-Romania and ROGER RAIL.
TOUAX -SAAF intends to start leasing and purchasing activities of rolling stock belonging to SAAF, on the occidental transport market (in France, Belgium, Germany). There have been elaborated a program for the current year which foresees the purchase of 550 wagons from our company; 440 wagons which are going to be leased and other 150 wagons which will be repaired and sold on the western market.
WAGON LEASING is the company that has to provide cargo wagons for leasing process on the European market. The contract concluded with this company is still in stand by because of the managing problems that have occurred: the former Management team of SAAF didn’t approach the requirements of internal regulations. But we are hoping that once the main shareholder is changed the launching program of this joint venture will also start. We are also expecting the results of our wagons operation that WAGON LEASING have purchased, after being repaired and rented on the Turkish market.
As about the third joint venture, ICA Romania, I can say that since 1st of January, 2001 it started to operate in the combined traffic domain having two trains on the Sopron -Bucharest route (weekly). In the same time, there has been conceived a business-plan, approved by the Managing Board of the joint venture, for supplementing the number of trains which will operate on the internal routes.
R.J.: By recycling the funds obtained from the good use of the assets, SAAf provides a new fund of investment for the modernization and the development of the three railway companies: CFR -SA, Passenger Transport Railway Company, Cargo Transport Railway Company. Which is the course of this evolution?
G.C.: There have been rehabilitated 114 samples (locomotives, heating wagons, electric railcar) in 1994 from the rolling stock poll, the value of the costs being evaluated to 92 billion lei; last year there have been rehabilitated 77 movable assets ( obtaining over 116 billion lei), and as regards the current year we estimate to accomplish the rehabilitation of 65 pieces ( 30 billion lei).
SAAF also concluded a contract with a Hungarian - Autrish - German consortium for the purchase in barter system (offering in exchange scrap-iron) of 60 wagons type RO-LA, on a highly technical level. The value of this contract is over 11 billion USD, half of this amount being already paid, scrap-iron being supplied to the foreign partner.
As regarding our collaboration relationship with National Passenger Transport Railway Company I can say that in 1999 we have repaired for this company 50 locomotives, 44 wagons for heating the train and three electric railcars. In 2000 there have been repaired eight locomotives, seven electric railcars, 43 heating wagons and we have rehabilitated only 19 passenger wagons and for 2001 we intend to repair a Diesel- electrical locomotive, a heating wagon and 63 passenger wagons.
For the purpose of supporting the three railway companies we have allocated almost 540 billion lei (including 2001), for the repairing process of 316 units of rolling stock.
R.J.: Can we discuss about a future for SAAF SA?
G.C.: Yes, we can. Presently, necessary funds for the rehabilitation and the modernization of the rolling stock poll are accomplished by recycling hundreds of thousands of tones of scrap-iron. We also stress the leasing process, and the purchase of railway assets, and not at last we will accelerate the revaluation of the estate goods (buildings, trains, production areas and railway routes) which belong to the railway companies.
We are aware of the reality and we understand that the activity of our company is linked to the existence of the movable assets that we have to turn into good use by being annulled. But, in relatively short time, this stock will be finished, meaning that the activity of our company will be reduced to zero. The same situation goes for the movable assets that have been saved for purchasing or renting and of those estates. In the moment when we will possess only a limited number of assets and shares of the joint ventures, we will be forced to take some decisions concerning the status of the company further on. SAAF will remain the manager of the assets left at that time, will become private or will give up those assets to the railway companies, which will continue this activity without any problem.

Magdalena Bran