Railways should have been opened to private operators since 2011, but the Ministry of Transport failed to choose contractors by 2015
PRESS RELEASE on Audit No. 15/22 – May 2, 2016
The Supreme Audit Office (SAO) scrutinized subsidies to passenger railway transport and aimed at the Ministry of Transport, which guaranteed services of train lines, compensated the Czech Railways for operating losses, and was opening the market to more operators. At the Czech Railways, auditors scrutinized whether the claimed compensations had been related to actual operating losses. The SAO criticizes the Ministry of Transport because the market has not been opened for private operators in spite a Government plan stated already in 2011 that by the end of 2015, one-fourth of all (then) subsidised national lines would have gone through tendering procedures.
The process of opening the market was mainly slowed down because of problems between the Czech Railways and other potential operators, which should have been solved by 2011. The problematic issues included questions of sharing the railway station buildings, which are in the possession of the Czech Railways, and whether and under which conditions would the individual operators recognise other parties’ travel tickets. Because of these problems, the Ministry abandoned plans to organise competitive calls for operators of the train lines.
The Ministry of Transport transferred subsidies for passenger trains only to the Czech Railways, which remained the single carrier. In 2010, the Czech Railways received subsidies in the amount of CZK 105 per train kilometre driven, while the amount increased to CZK 125 in 2014. Number of train kilometres driven by the Czech Railways trains dropped by 12 % since 2010. The subsidies amounted to CZK 13,400 million in 2014, out of which CZK 4,200 million were provided by the Ministry of Transport to support national train lines and CZK 9,000 million for regional lines. In spite of the received subsidies, the Czech Railways did not make any profit from passenger transport in the period 2010–2013 and the Company’s total loss amounted to CZK 1,000 million. The loss amounted to CZK 500 million in 2014.
In spite the compensations for train lines operation losses amounted to thousands of million CZK, the Ministry of Transport did not verify whether compensations were related to actual losses incurred within the period from 2010 to 2015. In 2014, the Ministry started such an inspection but did not finish it until the end of the SAO’s auditing operation and could not state when the results would be known.
The SAO concludes that when the market opens to private carriers, the compensations paid for losses of train lines operated by the Czech Railways will substantially decrease.
Supreme Audit Office