“Reorganizing SNCFR Was a Correct Solution”

Interview with Mr. Traian Basescu, Minister of Transports

Railway Journal: In October 1998 SNCFR was restructured into five railway companies. How do you appreciate after eight months, Mr. Minister, the activity of these companies?
Traian Basescu: Before reorganizing SNCFR its liabilities to the state budget amounted to ROL 4,900 billion. Currently, none of the five companies register losses. In terms of figures, the reality is obvious. However, the only company having certain difficulties even if registering a profit of ROL 200 billion, is CFR Freight (i.e. “CFR Marfa”) that is having cash flow problems due to their receivables from the Iron Works Galati, Conel and the Iron Works Hunedoara that are not being cashed. But, I repeat its balance sheet also shows positive results.
Presently, a lot of persons realize that the solution taken in October 1998 was a correct one. In this direction we have succeeded to eliminate the cross subsidy between the freight transport and the passengers’ one, that was distorting the value of the transport for industry. Currently, according to the law, the prices are updated for inflation only for the passenger transport and not for the freight transport. CFR Freight, I repeat, has only a cash flow problem due to the fact that certain beneficiaries of the freight transport haven’t paid the invoices.
RJ: Which is the solution that was found for obtaining the necessary cash?
TB: The payment in advance of the transport has been the solution applied since 1^st July 1999. We all now that over 200 loaded wagons are blocked in the mining zones and the transport will not start till the payment will be made.
RJ: Last year you stressed out that it is necessary for the new companies to become folded on the realities of the market. Do you believe they succeeded?
TB: Mostly, yes. It is obvious that even if CFR Freight has the best chances to become folded on market’s realities but, still, the company has a lot of difficulties in achieving it. The employees of this company did not understand, on one side that their place is not in the stations but at clients’ door and on the other side that the development of a marketing service – i.e. persons able to convince the beneficiaries of transport to choose the railway transport – represents an essential point for the sound activity of the company and for the increase of its turnover.
CFR Passengers (i.e. “CFR Calatori”) adapted itself better to the realities of the passengers’ transport but CFR Freight is still tributary to the goodwill, the flexibility to client’s needs and to the capacity to supply a fast and prompt service.
In this respect I could say that SAAF succeeded to adapt itself much better that the other companies. Firstly, the company started to obtain revenues by selling at the stock market the iron obtained by disintegrating the wagons that are no longer used. Secondly, it succeeded to send to Germany four locomotives. Thirdly, it has become obvious that SAAF’s management is ready, in any moment, to enter into commercial combinations that could put into value the resources of the company.
RJ: The railway infrastructure represents a priority involving a lot of investments. How do you consider such investments to be made and with which funds?
TB: The investments for the railway infrastructure are made by taking into account certain priorities. It was started with the sector of the utilities necessary for the maintenance of the rails. Consequently, the National Company CFR SA will be endowed with good quality utilities, specific for the upgrading works of the infrastructure.
Therefore, for the Bucharest – Brasov section, that should have been introduced into the upgrading program long time ago, the financing is realized through an EUR 200 million credit granted by the European Bank for Investments. The next section to be upgraded is the Bucharest – Constanta section where for the subsection Constanta – Cernavoda we are trying to obtain a Japanese financing program amounting to USD 205 million while the subsection Cernavoda – Fetesti benefits from a non-reimbursable credit of USD 50 million obtained from the European Union. Afterwards, we will have to seek financing for the Fetesti – Bucharest subsection.
RJ: The importance of the CFR within the European railway system is very well known. Are there any existing or envisaged projects for strengthening the connections with the European Railways?
TB: Currently we do not have any major projects in this respect, but it becomes more and more clear that the railway world started to join the alliances that are specific for this field. The alliances that are very powerful in the aviation field, started to appear in the railway transport also. As far as we are concerned, we hope that the year 2000 will be the starting year of the alliances for the exploitation of certain railway sections that will involve CFR Passengers or CFR Freight.
RJ: How necessary is the PHARE financing program for the rehabilitation program of the rails?
TB: The financing through PHARE programs, being non-reimbursable, is extremely important for the Romanian Railways. From the funds already obtained it has been acquired 40,000 tons of heavy rails necessary for the upgrading works in the Bucharest – Brasov section. Certain upgrading programs for the marshalling yards have been realized and we will also acquire equipment for the maintenance of rails. Thus, the financing through PHARE programs is highly significant for the Romanian Railways that benefited, up to now from EUR 58 million financing from PHARE. This proves, firstly, the interest of the European Union for supporting the Romanian Railways and, secondly, the capacity of our technicians to present feasible programs.
RJ: The Railway Journal is celebrating one year since the beginning of its activity. Do you consider that the subjects presented ever since have succeeded to awaken the interest of the readers?
TB: First of all, I would like to underline that I have the entire collection of the magazine and I actually like it. I consider it useful, because it succeeded to be connected constantly to the realities of the railways. Due to the fact that the pages of the Railway Journal reflected all the steps of reorganizing the former SNCFR, the magazine represented an important support for the management as well as for the employees. I would like to wish you the well-known “Happy anniversary” and a lot of good luck from now on.