February 25, 2013

Hungary poised for further rail reform

Written by  Ferenc Joo
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Hungary poised for further rail reform Ferenc Joo

HUNGARIAN State Railways (MÁV) is to merge its passenger, traction, and rolling stock maintenance subsidiaries into a single business unit from April 1 as part of a restructuring which will also see the creation of an independent infrastructure manager.

Passenger unit MÁV Start was spun off from the parent company in 2007, while MÁV Trakcio and Gépészeti became independent in 2008. One of the reasons for this restructuring was to prevent the cross-subsidisation of passenger activities from freight revenues, but with the privatisation of MÁV Cargo in 2008, this structure has become more of a hindrance to the passenger business than a benefit.

From April, MÁV Start will take ownership of the MÁV Trakció locomotive fleet, meaning it will no longer need to pay other companies to provide traction services. However MÁV Trakció will remain as an entity to "manage" the fleet, and the transfer of activities will be phased, meaning it will not be completed until the end of 2014.

April 1 will also see the creation of the National Rail Network Operator (NVP), a new infrastructure manager which will be institutionally separate from MÁV. This means MÁV will effectively become a holding company, responsible only for overseeing the activities of its remaining business units. The director general of NVP will be Mr Zsolt Völgyesi, who is current general manager of MÁV FKG, the infrastructure maintenance company based in Jászkisér.

The new structure is intended to bring Hungary in line with European legislation on liberalisation of the railway industry.

Meanwhile MÁV has released its financial results for 2012, which showed the group achieved an operating surplus of Forints 7bn ($US 31.4m). However, overall pre-tax results are negative showing a loss of Forints 3bn across the group. The total value of bank loans decreased from Forints 205bn in 2011 to Forints 156bn at the end of 2012, while MÁV Start fares income rose by 4.4% compared with 2011.

The improved results are largely the result of the government's decision to compensate MÁV fully for the cost of running the network.

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