Polish government against market liberalisation

As a transport economist with an expertise in the area of competition in network industries I appealed for years to stop monopolistic practices of Polish government and Polish regional self-governments concerning the subsidies given to Przewozy Regionalne sp. z o.o. (Regional Services Ltd). These subsidies are given against the intention of European laws introducing competition to regional rail services sector, that were introduced to protect consumers and to allow for revival of passenger rail transport.

Fotografia z witryny UNIFE, Organizacji Europejskiego Przemysłu Kolejowego. (Source: UNIFE website)

Polish regional authorities are obliged to use tendering process to purchase transport services on regional rail lines. Alas, Polish government (PO-PSL coalition) used a special clause in European regulations, that allow for not announcing tendering procedures, if the operator is owned by regional authorities. EU act on railway reform exempted regional authorities from the obligation to announce tendering procedures if they own the railway operator themselves.

Thus, enemies of free-market competition within the coalition government of Civic Platform and Polish Folk Party took a very unique in European context decision. The shares of the regional services sector of Polish State Railways were given to regional authorities, so that they would co-own it and no tendering procedures would be necessary. They transferred nearly all regional services in Poland to two companies owned by regional authorities. Of which one, Przewozy Regionalne, is co-owned by regional authorities of all 16 regions. This move was exceptional in EU context.

There is high probability that this move was done with the intention to bypass the regulations introducing free-market competition to this sector. Up to now, only one regional authority- in Kujavian- Pomeranian Palatinate (Województwo kujawsko-pomorskie) announced two fair tendering procedures that ended up in one case with a victory of a private rail operator. This tendering procedure was announced prior to transfer of regional rail services to a company coowned by all Polish regional authorities. The very person that prepared and announced the first and only tendering process won by private rail operator was later summoned to be the CEO of the dominant competitior, “Regional Services” Ltd.

Currently, regional authorities are not announcing tendering procedures, and the amount of money transferred to the state railways which are not a result of fair tendering procedures should be counted and treated as state aid, even if such practice is legal. I wrote several critical remarks. Unfortunately, most of the media is rather disinterested in free market or pro- governmental. Main newspapers and TV stations were not interested to broadcast my criticism. Only some Internet media published my critical remarks, which makes it difficult to reach the ear of Polish consumer.

Nationwide communal operator with dispersed ownership structure offers poor quality of regional passenger services at a high cost (as calculated per train kilometer). The company uses outdated and oversized fleet, which generates losses to the economy compared with modern fleet owned by private operators and regional authorities. The significance of railway transport is marginalized in such regions as Lubuskie, where most of passengers switched to busses and private cars. Railways in this region are carrying often only a handful of passengers. I saw that large regional trains that carried over hundred of passengers a decade ago, now carry 5- 7 passengers per train (filling circa 1 % of available places), such as the 5 p.m. Glogow- Zielona Gora service that I saw some months ago.

I think that the intention of law-givers was to promote competition for the rail market. Sadly, Polish government took different direction.