BUSINESS IN SHORT

Cargo plan passed by cabinet

THE STATE-run rail freight company Cargo might soon see part of its operations taken over by a private investor, after the cabinet green lighted a consolidation plan drafted by the Transport Ministry at its July 10 session.

THE STATE-run rail freight company Cargo might soon see part of its operations taken over by a private investor, after the cabinet green lighted a consolidation plan drafted by the Transport Ministry at its July 10 session.

The set of consolidation measures aims to secure long-term stabilisation of the company and the economic revival of the sector, the SITA newswire reported.

The Transport Ministry came up with the idea to divide some of the company’s activities and assets into subsidiaries; one to manage freight carriages, one to manage the trans-shipment of goods and one to repair machines and carriages. Subsidiaries would be open to private investors, which could bring Cargo over €200 million. The parent company, Cargo, should remain in the state’s hands. Prime Minister Robert Fico has remained adamant that no state-owned company deemed strategic, as Cargo is, will be privatised by his government.

“It’s hidden privatisation,” Ondrej Matej from the Institute of Transport and Economy and a former advisor to Prime Minister Iveta Radičová, told the Sme daily earlier this year.

The new Cargo subsidiaries, which will most likely be controlled by private businesses, will be profitable, while the parent company will continue accumulating losses, Matej predicted.

Cargo is heavily indebted. The company owes about €500 million, including €130 million to the state from an outstanding loan, according to Sme. Finances were also hard hit as the volume of transport dropped from 49 million tons in 2007 to 33 million in 2008.

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