Railway Reform: Toolkit For Improving Rail Sector Performance

• Government,
  Railways, and the
  Public Interest

• National Transport
  Strategy

• Railway Industry
  Structure

• Purchase of
  Transport Services

• Industry Regulation

• Transnational
  Railway
  Agreements and
  Treaties

• Administrative
  Apparatus

Administering the Railway

Buying Services from the Railway

Setting the Regulatory Framework

The Roles of Government

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Administrative Apparatus

The sixth and final role of government is to create and use state apparatus to perform all the other roles described above. The state apparatus must suit the industry structure adopted, which can differ by country. Some dimensions include: (i) distribution of responsibilities among ministries; (ii) delegation of decision making between national and local governments; (iii) preference for departmental or agency-type institutions; (iv) preference for single-mode or multi-modal functional divisions within the ministry.

A key requirement is to avoid conflicts of interest by separating the sector policy and regulatory functions from the commercial operation. When policy/regulatory advisory functions and the day-to-day responsibility for a government railway are co-located, government railway administrators are usually able to persuade themselves that the interests of the public railway coincide with the public interest in railways.

Co-location of railway policy, regulation and corporate oversight of railway operations makes it difficult to evaluate policy options such as increasing the degree of competition because that adds risk to the incumbent railway's financial position. Also, seeking private finance for rail projects can be difficult because potential investors in a new rail venture may feel that partnering with government is like giving a single stakeholder control over entry to the playing field, rules of the game, ownership of a preferred team, and the selection of referees. Finally, safety and environmental regulations that protect the public interests shown in Figure 6.1 seem unlikely to emerge from administrators of the organizations affected by the regulations.

After railway policy and regulatory roles are separated from commercial management, governments must decide how best to shape it departments to execute those roles. These options are explored in Section 4. Issues of 'corporate governance' of railway entities—integral to the role and operation of railways rather than governments—are in Section 5 of this toolkit.

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