Though it has been 10 years since railway transportation was liberalized, investments and share of private operators are still too small. What are private companies waiting for?

Recently, Railway Transportation Association published a report describing the present situation and also stating demands of private sector.

Report points out that private investments in railway transportation has been quite small compared to what was expected after liberalization. It has been 10 years and there are only 4 private companies to get operator license, 2 to start operations, 1 to continue operations with its own fleet, only 12 private locomotives. Private wagons, which started many years before liberalization, only increased from 3422 to 3723 in this period.

Private operators carried 6.3 million tons of freight (16% of total rail freight) with 5% of total loco fleet including rented ones. Private companies, controlling 20% of freight wagons carried 10.8 million tons of freight, about one third of all rail freight.

The targets of liberalization, competition between operators, cheaper transports in wider area, sharp increase in investments, are clearly not met. The only development during this time is the investments of Korfez Ulastirma in fleet, maintanance and safer transport.

There is surely no competition between operators. Two private operators carry some loads of their group companies where rest of all are being carried by TCDD Tasimacilik using its standard tariff.

Why interest of private companies is so limited in railway transportation? Why companies, even the ones which already have huge volumes on rail, stay away? What do they wait for investment in this area? Here are the demants of private sector:

State support

TCDD Tasimacilik gets support every year for its loss. That makes pricing below its costs possible. Private companies request “fair play” however not by cancelling state support to TCDD Tasimacilik, on the contrary by getting similar support from state for themselves as well.

Usage of workshops

TCDD Tasimacilik has workshops for maintanance all over Turkey. New operators should either build their own like Korfez Ulastirma which build an extensive workshop at Izmit, or get service from TCDD Tasimacilik. However, private companies request to use these workshops with their own teams.

Improving infrastructure

Though TCDD renews most of its network, those works generally include renewal of buildings, sleepers and rails without any route change. However steep slopes and sharp curves are important cost factoırs. Steep slopes mean carrying less load with same loco or need additional loco to pass over that slope. Sharp curves mean shorter life for wheels, which is the second biggest cost item in railways after fuel.

Incentives

Currently investments in railway transport are given 40% incentives, which means 40% of investment is paid back by deducting from taxes. “Deducting from taxes” is expressed to last too long, thus faster pay back is requested.

In addition to above, other incentives like fuel without OTV (special consumption tax), tax exemptions, social security exemptions, direct support for shift from road to rail as in UK, energy support as in Germany are requested.

Improvement in legislation

The requests under this topic are as follows:

• Incentives and direct support for building new freight terminals
• Building of rail connections to industry regions and sites by government/TCDD
• Reorganization of school program so that no further courses needed after school

Reduction of energy costs

Fuel/energy is the most important cost item in railways and private companies’ requests on this are as follows:

• Compensation of increases in energy costs by state in determined periods
• OTV (special consumption tax)-free fuel
• Incentives to involve private companies in renewable energy investments on TCDD owned fields
• Buy back of electric energy produced during brake of locos

It seems, state will not be able to take its hands from the railway transportation for a long time. By liberalization and competition, it was expected that TCDD Tasimacilik will increase its efficiency and will need less state aid. Now in addition to increasing need of support for state company, incentives for private companies are also requested.

Unlike TCDD Tasimacilik, private companies can choose client, route or business, apply different pricing policies, run with lower costs. Despite this, they request incentives and support to invest in railway transportation, which makes it hard to be optimistic about the future of sector.

Cover photo: Onur Uysal ©