THE STATE-OWNED railway freight service Cargo Slovakia is drowning in debts. With the company losing many orders due to the economic downturn, its income in the red again, and its rising debt level pointing toward possible bankruptcy, the government has decided to provide financial help of about €133 million, the Sme daily reported.
The government has decided to intervene to help Cargo Slovakia with either a loan or by increasing the company's fixed assets, Sme reported Prime Minister Robert Fico as saying.
The motivation for this financial assistance is mainly to save the jobs of Cargo Slovakia's emplyees, who currently number more than 10,000, with an average monthly salary of €740, wrote Sme.
Cargo Slovakia planned to transport 48.1 million tonnes of goods in 2008 but its actual volume was only 44.5 million tonnes. The most significant decreases, over 70 percent, were recorded in the last two months of last year. The volume of goods transported by Cargo Slovakia in January 2009 was only 55 percent of its volume in the previous January, Sme wrote.
Experts say the economic crisis will encourage mergers of railway freight transporters in Europe.
Cargo Slovakia is too small to survive in the European market and the idea of merging with a freight service provider from a neighbouring country seems rational, the general director of the Transport Research Institute, Ľubomír Palčák, told Sme.
The opposition political parties have argued that privatisation of Cargo Slovakia, which was halted by the current government, could have prevented this situation where the freight company is dependent on help from the state.