{"id":141167,"date":"2024-10-17T23:10:45","date_gmt":"2024-10-17T13:10:45","guid":{"rendered":"https:\/\/www.railfreight.com\/?p=57236"},"modified":"2024-10-17T23:10:45","modified_gmt":"2024-10-17T13:10:45","slug":"romanias-controversial-plan-to-save-state-rail-freight","status":"publish","type":"post","link":"https:\/\/www.vibewire.com.au\/?p=141167","title":{"rendered":"Romania\u2019s controversial plan to save state rail freight"},"content":{"rendered":"

CFR Marf\u0103, Romania\u2019s state-owned rail freight operator, will soon be liquidated following bankruptcy. In its place will now come a new state-owned operator by the name of Carpatica Feroviar. However, its establishment raises many questions about the legality of Romania\u2019s plans, sector experts tell RailFreight.com.<\/b>
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CFR Marf\u0103\u2019s last profitable year was 2007, 17 years ago. Since then, it has recorded loss after loss<\/a>, which has inevitably led to the Romanian government having to bail the company out.<\/p>\n

That in itself is not out of the ordinary. Government support for state-owned rail operators is accepted in EU law, as long as it does not constitute market distortion. However, in the case of CFR Marf\u0103, the European Commission found exactly that: Romania provided aid in ways that are illegal. Ultimately, that finding would push CFR Marf\u0103 to the financial brink.<\/p>\n

Skyrocketing debt<\/h2>\n

\u200b\u200b”Certain public support measures in favour of the state-owned incumbent CFR Marf\u0103 have given them an unfair economic advantage vis-\u00e0-vis other operators\u201d, the Commission argued<\/a> in 2020. \u201cThey consist of the cancellation of public debts and the failure of public creditors to collect debts from the company. This is in breach of EU State aid rules. Romania will now have to recover the incompatible aid.\u201d<\/p>\n

The findings by the Commission made CFR Marf\u0103\u2019s debt skyrocket overnight. The rail freight operator has to pay back the entire sum of over half a billion euros to the government. Whereas its debts amounted to 1.318,06 million Romanian lei (264,89 million euros) in 2019, in 2022 that had grown to 4.464,81 Romanian lei (897,21 million euros). Whereas CFR Marf\u0103 has tried to pay back the illegal state aid, it has not been able to do so at a pace desired by the Commission.<\/p>\n

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CFR Marf\u0103\u2019s debt skyrocketed after the European Commission ordered the return of over half a billion euros in illegal state aid. Image: Infogram. \u00a9 RailFreight.com<\/figcaption><\/figure>\n

Pre-insolvency procedures for CFR Marf\u0103 were started in 2020 as the company’s earnings fell dramatically. The Romanian state is now trying to save its rail freight operations. It opted for a Romanian rendition of the \u2018Alitalia scenario\u2019 for the future CFR Marf\u0103. In the case of that Italian company, it went bankrupt, closed for three months, and then the state bought the assets and created a new company.<\/p>\n

Romania is eyeing a similar scenario for CFR Marf\u0103, according to various RailFreight.com sources. At the same time, the Romanian state seems to be hiding its intentions, since they may turn out to be in breach of EU law and electorally unpopular. Nevertheless, on 16 October, it went ahead and approved the founding of Carpatica Feroviar.<\/p>\n

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CFR Marf\u0103\u2019s earnings collapsed after the European Commission\u2019s decision, recovered in 2023, and seem to be dropping again in 2024. Image: Infogram. \u00a9 RailFreight.com<\/figcaption><\/figure>\n