Bundestag clears way for Deutsche Bahn privatisation

30th May 2008, Comments 0 comments

The German parliament has approved a compromise deal which will see around 25 percent of national rail operator Deutsche Bahn in private hands

Berlin -- The German Parliament cleared the way Friday for the privatization of Germany's railway company, Deutsche Bahn AG, by agreeing to a controversial plan to sell off shares in Europe's biggest rail group.

Chancellor Angela Merkel's ruling coalition pushed the proposal to allow private investors to buy up to 24.9 percent of Deutsche Bahn's passenger and logistics operations through the lower house of parliament (Bundestag) with Deutsche Bahn expected to make its stock market debut later this year.

The move by the Bundestag to sign off on the privatization plan came despite the three opposition parties voting against the sell-off and the stiff opposition from the influential leftwing faction of the Social Democrats, the junior member of Merkel's conservative-led coalition.

"It is a good day for (rail) travellers, taxpayers and employees," said Deutsche Bahn chief Hartmut Mehdorn.

Analysts say the planned partial privatization should generate about six billion euros (9.3 billion dollars) with proponents of the sell-off saying it would help to mobilize capital for the railway.

But the 24.9 per cent share sell off, which was proposed by SPD chief Kurt Beck as a compromise, falls short of the 49.9 percent that Merkel's supporters have argued for.

Indeed, senior members of her political bloc have indicated that they see the 24.9 percent as representing possibly the sale of the first tranche of shares in the railway company.

Moreover, analysts have criticised the privatization model as resulting in only a small parcel of shares being sold off. This could result in the stock ending up principally in the hands of big institutional investors, some analysts say.

Under the plan, the state would have a 75.1percent stake of Deutsche Bahn's passenger and freight operations.

However, the partial privatization means that Berlin would retain a 100 percent control of the rail company's railway stations as well as its 34,000 kilometres of track network and energy supplier operations. DPA

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