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TITLE: RAILWAYS REORGANIZATION
SUBJECT COUNTRY(IES): ROMANIA
POST OF ORIGIN: ROMANIA
SERIES: INTERNATIONAL MARKET INSIGHT (IMI) ITA
INDUSTRY CODE: RRE
DATE OF REPORT (YYMMDD): 990401
DELETION DATE (YYMMDD): 200401
AUTHOR: DAN FLORU
APPROVING OFFICER: JEREMY KELLER
OFFICER'S TITLE: SENIOR COMMERCIAL OFFICER
NUMBER OF PAGES: 2
INTERNATIONAL COPYRIGHT, U.S. & FOREIGN COMMERCIAL SERVICE AND U.S. DEPARTMENT OF STATE, 1999. ALL RIGHTS RESERVED OUTSIDE OF THE UNITED STATES
Summary
Romania s national railway, Societatea Nationala Caile Ferate Romane (SNCFR), is positioning itself at the forefront of the country s privatization campaign. Unlike most of the big, state-owned enterprises, it is not burdened with insurmountable debt and is not trying to support a big, redundant workforce, having already laid off 26,500 workers in preparation for privatization.
SNCFR will soon offer a broad range of opportunities for U.S. businesses in locomotive upgrades, telecommunications, railcar manufacturing and rebuilding, railcar maintenance and cleaning, computerized ticketing and warehouse and silo operation along railway rights-of-way in Romania. In March, State Minister Berceanu met with Ambassador Rosapepe and SCO, where he explained his strategy for SNCFR and the purpose of his trip to Washington--to explain what lies ahead to U.S. investors.
Railway V.P. Olievschi confirmed Bercenu s privatization goals for the railway and its needs for foreign technical assistance at a speech to the Transportation Working Group of the U.S.-Romania Action Commission on March 23, 1999 in Bucharest. SNCFR s Outsourcing Goals The railways Council of Administration plans to out-source some specific activities as a first step in privatization. These include the operation of sleeping cars and restaurant cars, and the maintenance and repair of passenger cars.
SNCFR s Freight Transport company will likewise outsource washing and cleaning of general purpose boxcars and tank cars, operation of the road/intermodal transport, and the production of graphite brushes. Finally, the Infrastructure Management Company will outsource railway signaling and the automation of its equipment. During the next two years, SNCFR will prepare for the Freight Company s privatization, and also perform due diligence to privatize its telecommunications. The railway s telecommunications are already organized as a separate branch of management infrastructure. The future actions related to this objective will be the evaluation of this branch and the preparation of its privatization. This last action is supposed to take place after 2002 when the whole country s communication market will become free. Locomotives
Given its intention to increase traffic speed, SNCFR will require more powerful, modern locomotives. U.S. companies are particularly interested in the 2100 HP diesel/electric locomotives. Two prototipes with GM engines are being built and will soon start tests. Other U.S. companies are also having a look at this market segment, as Romania s requirement for locomotives of this type will amount to about 60-70 Pcs. Safety Another key goal of the Ministry of Transport is improved safety in rail operation. More railway passengers lose their lives in accidents in Romania than pedestrians.
During the visit of Minister Berceanu to Washington, a Memorandum of Understanding (MOU) was signed with the U.S. Department of Transportation and the Federal Railroad Administration to help improve the safety of Romanian rail operations. The MOU called for the creation in Romania of a set of laws that would make the different legal entities concerned with rail safety work in a cohesive way. Prior to the SNCFR restructuring this cohesion was obtained through centralized management. The memorandum called, also, for developing joint strategies for organizational and operational restructuring. To implement the MOU, the Romanians envisage the following steps: identify institutional structures, both at national and at local levels, capable of organizing this activity; train Romanian safety inspectors from the Railway Authority; create an educational framework aimed at increasing the safety of operations. Business on Rights-of-Way Before departure to Washington, Minister Berceanu explained to Ambassador Rosapepe that lucrative opportunities for U.S. investors will soon be offered along SNCFR rights-of-way. These include warehouses and silos. There is a big surplus of existing warehouses along rights-of-way. These are available for all sorts of manufacturing and business purposes, and can be made available free of charge or at nominal prices to international investors willing to hire redundant SNCFR employees for retraining in manufacture.
To counter possible frustration of U.S. interest in silos by the bureaucratic labyrinth of the State Ownership Fund (SOF), Berceanu explained that U.S. investors would be free to build their own silos along rights of way rather than go though the SOF privatization process. Conclusion We advise U.S. industry to pay close attention to the gamut of privatization efforts that involve SNCFR. While forward-looking U.S. corporations, e.g., General Electric, General Motors, Trinity, and Greenbrier, are already starting work here on locomotive and railcar building, most of the lucrative projects involving SNCFR are still to come.
Source: U. S. Department of Commerce - National Trade Data Bank, November 3, 2000
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