Poland



Introduction



The Polish railway industry was devastated by the collapse of the planned economy in Eastern Europe and Central Asia. Traffic volumes plummeted as traditional rail customers vanished. At the same time, Government deregulated road transport unleashing fierce competition for the remaining traffic. This led to severe financial, market, operational and asset challenges for the railway industry. Government responded with well-planned railway industry reforms, consistent with the European Union (EU) acquis communautaire for railways. This case study describes these reforms and their impact on the Polish railway industry.


Prior to Reforms

In the early 1990s, the Soviet economic system collapsed, reducing steel and coal shipments, and driving down railway freight traffic in Poland. Polish State Railways, Polskie Koleje Panstwowe’s (PKP), freight revenues dropped by 67 percent in real dollars (Figure 1). This drop was accompanied by a 34 percent slump in freight market turnover, and a 48 percent slump in passenger turnover (Figure 2).



By end-1999, subsidies to sustain PKP were reaching 2.0 percent of GDP172, and PKP's freight modal share had tumbled to 35 percent from a high of 51 percent.173



As railway financial and market performance plummeted, PKP’s track maintenance backlog kept mounting, thus increasing infrastructure costs, and requiring the railways to impose slower speed limits on many lines (Figure 3). Maintenance and renewal backlogs were mounting in other asset classes as well, for example, 60 percent of the PKP signaling system is more than 40 years old.



Operational productivity declined less than traffic—and in some cases improved—because PKP employed multiple strategies to cope with the tough market and financial environments (Figure 4). Employee productivity improved as PKP transferred some non core activities to other ministries, and offered severance packages to some staff. Asset productivity was mixed as PKP responded to the market by moving excess capacity out of rotation as political and physical constraints allowed.



Declining revenues, market performance, asset condition, and mixed operational productivity indicated that aggressive reforms were needed in the Polish railway industry.

    


172 Technical paper number 533 — Expenditure Policies Toward EU Accession (World Bank)
173 World Bank Railway database
 
 
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