Railway reform in the Central and
            Eastern European (CEE) economies
In May 1992, the World Bank hosted a
            Railway Rountable in Vienna, Austria, attended by transport
            ministers, advisors, and senior railway staff from the
            Central and Eastern European (CEE) countries.  The
            Roundtable reviewed recent trends in the railways'
            roles in these countries and identified appropriate actions
            to address emerging transport issues in the CEE region.  The
            Bank prepared this strategy paper based on the discussions
            and the apparent widespread consensus that emerged at the
            Rountable.  The financial situation of the CEE railways is
            beginning to deteriorate rapidly, and the CEE railways are
            not well positioned to provide good, reliable service to
            their increasingly market-driven customers.  These countries
            are thus under increasing pressure to restructure their
            railways to relieve financial pressures and meet future
            needs.  Railways in market economies have faced a steadily
            declining role in the transport market, and have typically
            dealt with emerging problems by tinkering at the margin -
            for example, by debt write-offs - and thus delaying
            attacking their underlying structural problems.  Many of
            these governments have come to the conclusion that drastic
            surgery is required - as illustrated by the British, German,
            and Japanese railways.  The agenda for change that emerged
            from this Roundtable emphasized developing a strategic plan
            for restructuring the railway. This plan should define the
            market; project the level of activity (tons, ton-kilometers
            and freight tariffs, passenger-kilometers and passenger
            fares) for all business activities; include a five-year
            financial plan for the different lines of railway business
            (to make options concrete); and define all government
            policies and changes that would put the railway on a level
            playing field with competing modes of transportation.  One
            item on the agenda for change is to convert the current
            railway enterprise operating under normal commercial law.
            The board of directors should include representatives from
            government, the railway executive and high-level business or
            public representatives from outside of government.
            Formation of JSC or independent enterprise does not
            necessarily imply privatization of the railway because the
            underlying assets may well remain in public hands. The
            objective is to change the enterprises' authority and
            enhance their commercial orientation.  The other item on the
            agenda for change is to have the explicit mission of the
            railway be to operate freight and intercity passenger
            services on a commercial basis, with revenues from services
            covering all costs, including a return on investment.
            Social services such as urban passengers, should be
            identified and supported by the appropriate governmental agencies.