Aligning national priorities with EU requirements in Romania’s passenger railway transport

1. “Zilele Feroviare” Conference, Bucuresti, 1-17 October 2006 Aligning national priorities with EU requirements in Romania’s passenger railway transport Alexandru NOAPTEŞ Chairman & CEO “CFR Calatori “ Romania

2. Aligning national priorities wth EU requirements in Romanian passenger railway sector Main objects Romanian passenger railway transportin the EU area • Traffic volume and market share European Union and Romanian Priorities • Legislative and institutional framework for Railways in Romania and EU Challenges in the development of passenger railways sector • Externalization of non-core activities • Public service contracts, subsidies for Railways • Better quality services Conclusions

3. Aligning national priorities with EU requirements in Romanian passenger railway sector Romania towards European Union Accession • Area : 238.391sq km • Population : 22,6 milion, out of which 2,4 million in the Capital City, Bucharest • Romanian Railway Network characteristics: • 10.088 km out of which: - 2707 km of double track (27%) - 3929 km of electrified track (35,9%) • 1000 railway stations … Romania prioritizes the transport development in the context of European Union integration in 2007.

5. Aligning national priorities with EU requirements in Romanian passenger railway sector EU-25 transport evolution and economical development (source – Eurostat) EU-25

6. Aligning national priorities with EU requirements in Romanian passenger railway sector Main projects established in collaboration with the European Union

7. Aligning national priorities with EU requirements in Romanian passenger railway sector Romanian passenger railway transport in EU-25 space Passengers kilometers (2004) – (UIC statistics)

8. Aligning national priorities with EU requirements in Romanian passenger railway sector Passengers by mode of transport in EU-25 and Romania (passenger km in % - Eurostat source)

9. Aligning national priorities with EU requirements in Romanian passenger railway sector Evolution of the passenger railway transport in Romania (Romanian Statistics – INS)

10. European Union and Romanian Priorities

11. Aligning national priorities with EU requirements in Romanian passenger railway sector A Common European Railway area The principal objective for the EU rail system of the future is: « Creation of an integrated European railwayarea to allow crossborder services under a single responsibility in order to guarantee the quality of services to the customer »

12. “At present, Romania applies all the applicable provisions of the Community Aquis in the transport sector” (Position Paper of Romania, Chapter 9), the railway reform being, thus, well underway. Aligning national priorities with EU requirements in Romanian passenger railway sector Romania and European Union Chapter 9 of the Community Aquis “Transport Policy” was opened for negotiations at the Accesion Conference on 12 June 2001 and was provisory closed on 9 December 2003. • Legal Reform • Institutional Reform • Financial Reform • in order to increase the efficiency of the railway system

13. Aligning national priorities with EU requirements in Romanian passenger railway sector Application of EU railway legislation in Romania By applying the Council Directive 91/440, adjusted by 2001/12, concerning the development of the railway network of the European Community, the reorganization of SNCFR was initiatedby splitting the former company on activity objects.

14. Aligning national priorities with EU requirements in Romanian passenger railway sector Application of EU railway legislation in Romania “CFR Calatori” operates in the basis of a 5 years transport license for providing “passengers railway transport”issued by the Romanian Railway Authority (AFER), as a result of the application of theCouncil Directive 95/18 adjusted by 2001/13regarding the certification of the railway undertakings. By the application of theCouncil Directive2001/14 concerning the allocation of the railway infrastructure capacities and the levy of taxes for the use of infrastructure for the freight and passengers’ transport: CFR Calatori concludes an annual contract with CN CFR SA-the infrastructure manager - provides the payment of an infrastructure access fee according to the train/km indicator (which is different for freight and passenger trains -2.4 EURO/km in 2005).

15. Aligning national priorities with EU requirements in Romanian passenger railway sector Application of EU railway legislation in Romania România applies all the provisions of theCouncil Regulation 1191/69 concerning the obligations imposed by the “public service “ concept. Thus, according to the4 yearscontractagreed between “CFR Călători” and the Ministry of Transport, the requirements of the Public Service Obligations for the passengers railway transport are settled as follows: - for passengers railway transport in general; - for the transport of certain categories of passengers : war veterans, seniors, students.

16. Aligning national priorities with EU requirements in Romanian passenger railway sector Application of EU railway legislation in Romania • Interoperability of railway transport: The following EU Directives were transposed in the Romanian Legislation: The Council Directive 96/48concerning the interoperability of high–speed Trans - European railway system and The Commission Directive 1999/569concerning the basic parameters for the signal and command – control subsystem of the high- speed Trans – European railway system. Due to theDirective 2001/16concerning the interoperability of the conventional railway system, CFR Călători paid special attention to the modernization of the rolling stock fleet. In this respect, the refurbishment and modernization of coaches and locomotives are being carried out taking into account the international technical provisions. CFR Călători is interested in applying the European Rail Traffic Management System(ERTMS).

17. Challenges for the development of passenger railway sector

18. Aligning national priorities with EU requirements in Romanian passenger railway sector CFR Călători’s main activityand the externalization of non–core activities • The National Passengers Railway Company ”CFR Călători” – is the only national operator which provides passenger services on the Romanian railway network. • - it was established – as a completely independent company - in 1998 due to the reorganization of the National Romanian Railway Company (SNCFR). • During the year2005/2006there are an average of1776trains runnig daily, out of which: • - International trains 77 • - Intercity trains 46 • - Fast trains 99 • - Express trains 56 • - Local trains1476 • - Seasons trains 24

19. Branches of“CFR Călători” S.N.T.F.C. “C.F.R. Călători” S.A. Company for maintenance and repair of passengers’ cars “SIRV” (4 companies) 4 Maintenance & Overhaul Coaches Company 4 Maintenance & Overhaul Coaches Company SOLD 4 Maintenance & Overhaul Coaches Company Supply Company “CFR SCAD Braşov Company operating bar and sleeping cars “CFRGevaro” Travel tickets selling Company ”CFR Voiaj” Locomotivesmaintenance and repairs Company“SCRL Brasov“ Company for Express Delivery “CFR Mesagerie” SOLD

20. Aligning national priorities with EU requirements in Romanian passenger railway sector Challenges of development: PUBLIC SERVICE CONTRACT Due to the Performance Contract,CFR Calatori is obliged to: - provide passenger services according to the quality and safety standards stipulated in the contract, - maintain running certain circulation sections with low traffic, for which there is no alternative solution of transport. CFR Calatori receives from the State Budget: - a compensation which covers the difference between tariffs and costs. - a contribution for investments (rates and interests for international loans).

21. Aligning national priorities with EU requirements in Romanian passenger railway sector Challenges of development: PUBLIC SERVICE CONTRACT

22. Aligning national priorities with EU requirements in Romanian passenger railway sector Challenges of development: PUBLIC SERVICE CONTRACT Expenditure structure Expenditurestructure2004

23. Aligning national priorities with EU requirements in Romanian passenger railway sector Challenges of development: PUBLIC SERVICE CONTRACT Revenues structure Operational Revenues 2004

24. Compensation for PSO (to cover de differance between costs and tariffs) State buget contribution for investments Total state contribution

25. Aligning national priorities with EU requirements in Romanian passenger railway sector Challenges of development: increasing the quality of passenger services • The main assets:- 306 electric locomotives of 5100kw • - 59electric locomotives of 3400kw • - 245 Diesel electric locomotives • - 216 Diesel hydraulic locomotives • - 3166 passenger cars (604 cars, 1st class • and 2562 cars, 2nd class) • - 140 DMU+ 94DMU -Désiro type • - 160 sleeping cars • - 31dining cars • - 70 berth cars • Personnel: 17 080employees

26. Aligning national priorities with EU requirements in Romanian passenger railway sector Challenges of development: increasing the quality of passenger services: rolling stock modernization

27. Aligning national priorities with EU requirements in Romanian passenger railway sector Challenges of development: increasing the quality of passenger services:rolling stock modernization Modernisation of 24 Electric locomotives Modernization of 65 Diesel Locomotives Acquisition of 120 new DMU (DESIRO type) Acquisition of new built Corrail coaches Modernization of 100 coaches

28. Aligning national priorities with EU requirements in Romanian passenger railway sector The future modernization projects Carrying on the Modernization of the selling and reservation system of passenger tickets ; • Purchase of electric multiple units (EMU); • Modernization of electric locomotives of 5100 kw; • Modernization of electric locomotives of 3400 kw; • Modernization and acquisition of coaches; • Impact reduction on the environment within SNTFC units by modernizing the pre – filtering systems of the worn waters and by processing the mud.

29. Aligning national priorities with EU requirements in Romanian passenger railway sector Conclusions: What we achieved ! Romania is rigorously implementing the European Legislation integrating it in the Romanian legislative environment; Romania has successfully restructured the national railway system by establishing an infrastructure manager and two separate operators for the passenger and freight transport as well as an independent regulatory authority; The externalization and privatization of the auxiliary activities offered a more efficient approach of activities in all railway State owned companies. Romania is one of the first European countries which has successfully applied this reform; The railway passenger transport holds an key role in Romania’s economy.

30. Aligning national priorities with EU requirements in Romanian passenger railway sector Conclusions: What we need to achieve! • Romanian passenger railway system is facing the same challenges as EU railways and needs to concentrate on: • Mobilization of investments for rolling stock modernization; • Implementation of a new tariff system for infrastructure access charge, to reduce the fee by reflecting the real costs of operation; • A new Public Service approach for consolidating a business orientated railway company implies: • - concluding a more elaborated PSC, clearly mentioning the necessary subvention and their sources; • - the separation of the commercial services from the PSC activity; • - the implication of regional and local authorities in financing the local passenger traffic. • The role of the state is very important for the development of passenger railway transport, sustaining the quality of services by investments placed in key areas of interest for the benefit of the customers.

31. Thank you for your attention!