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

Romanian passenger railway transport in 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 Aligning national priorities wth EU requirements in Romanian passenger railway sector Main objects Main objects

Romania towards European Union Accession Romania towards European Union Accession Area : sq kmArea : sq km Population : 22,6 milion,Population : 22,6 milion, out of which 2,4 million in the Capital City, Bucharest out of which 2,4 million in the Capital City, Bucharest Romanian Railway Network characteristics:Romanian Railway Network characteristics: km out of which: km out of which: km of double track (27%) km of double track (27%) km of electrified track (35,9%) km of electrified track (35,9%) 1000 railway stations1000 railway stations … Romania prioritizes the transport development in the context of European Union integration in … Romania prioritizes the transport development in the context of European Union integration in Aligning national priorities with EU requirements in Romanian passenger railway sector

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

Main projects established in collaboration with the European Union

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

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

Evolution of the passenger railway transport in Romania (Romanian Statistics – INS)

European Union and Romanian Priorities

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

Aligning national priorities with EU requirements in Romanian passenger railway sector “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. 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 Legal Reform Institutional Reform Financial Reform in order to increase the efficiency of the railway system

Aligning national priorities with EU requirements in Romanian passenger railway sector Application of EU railway legislation in Romania SNCFR splitting by activity objects Management of the railway infrastructure and of the auxiliary railway patrimony(CN”CFR” SA) Freight Railway Operator (CFR Marfa) Passenger Railway Operator( CFR Calatori) 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 initiated by splitting the former company on activity objects. 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 initiated by splitting the former company on activity objects.

Application of EU railway legislation in Romania Aligning national priorities with EU requirements in Romanian passenger railway sector “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 the Council Directive 95/18 adjusted by 2001/13 regarding the certification of the railway undertakings. By the application of the Council Directive 2001/14 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 ).

Application of EU railway legislation in Romania România applies all the provisions of the Council Regulation 1191/69 concerning the obligations imposed by the “public service “ concept. România applies all the provisions of the Council Regulation 1191/69 concerning the obligations imposed by the “public service “ concept. Thus, according to the 4 years contract agreed 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 : - for the transport of certain categories of passengers : war veterans, seniors, students. war veterans, seniors, students. Aligning national priorities with EU requirements in Romanian passenger railway sector

Interoperability of railway transport : Interoperability of railway transport : The following EU Directives were transposed in the Romanian Legislation: The Council Directive 96/48 concerning the interoperability of high–speed Trans - European railway system and The Commission Directive 1999/569 concerning the basic parameters for the signal and command – control subsystem of the high- speed Trans – European railway system. The Commission Directive 1999/569 concerning the basic parameters for the signal and command – control subsystem of the high- speed Trans – European railway system. Due to the Directive 2001/16 concerning 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). Application of EU railway legislation in Romania Aligning national priorities with EU requirements in Romanian passenger railway sector

Challenges for the development of passenger railway sector

CFR Călători’s main activity and the externalization of non–core activities CFR Călători’s main activity and 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). - it was established – as a completely independent company - in 1998 due to the reorganization of the National Romanian Railway Company (SNCFR). During the year 2005/2006 there are an average of 1776 trains runnig daily, out of which: - International trains 77 - International trains 77 - Intercity trains 46 - Intercity trains 46 - Fast trains 99 - Fast trains 99 - Express trains 56 - Express trains 56 - Local trains Local trains Seasons trains 24 - Seasons trains 24 Aligning national priorities with EU requirements in Romanian passenger railway sector

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

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). Aligning national priorities with EU requirements in Romanian passenger railway sector

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

Challenges of development: PUBLIC SERVICE CONTRACT Expenditure structure Expenditure structure 2004 Aligning national priorities with EU requirements in Romanian passenger railway sector Track Access Charges (Euro per train km) CFR Calatori Calatori

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

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

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

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

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

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

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. 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. Aligning national priorities with EU requirements in Romanian passenger railway sector

Thank you for your attention! Thank you for your attention!