Germany agrees to privatize Deutsche Bahn

9th November 2006, Comments 0 comments

9 November 2006, Berlin (dpa) - Germany's ruling coalition has agreed to partly privatize the country's federal rail system by 2009, Transport Minister Wolfgang Tiefensee said Wednesday in Berlin after months of wrangling. Investors are to be offered a minority stake in the rail company, Deutsche Bahn, which operates not only trains but also trucks in several European nations. Hans-Peter Friedrich, representing Chancellor Angela Merkel's own Christian Democrats, said after inter-party talks that the govern

9 November 2006

Berlin (dpa) - Germany's ruling coalition has agreed to partly privatize the country's federal rail system by 2009, Transport Minister Wolfgang Tiefensee said Wednesday in Berlin after months of wrangling.

Investors are to be offered a minority stake in the rail company, Deutsche Bahn, which operates not only trains but also trucks in several European nations.

Hans-Peter Friedrich, representing Chancellor Angela Merkel's own Christian Democrats, said after inter-party talks that the government would remain owner of the 34,000 kilometres of track and the stations, but Deutsche Bahn would obtain contractual rights of use.

Tiefensee, who is a Social Democrat, said the parties struck a deal where the government would not take over any of Bahn's debt and existing job guarantees for Bahn staff would remain in place.

A privatization bill would be drafted by the end of next March.

Another Social Democrat, Ludwig Stiegler, said the size of the first share tranche would depend on the value of Deutsche Bahn at the time of the offering. Earlier, sources had suggested up to one quarter of the government-owned company would be offered for sale.

German Chancellor Angela Merkel had affirmed Tuesday, "We stand by our intention to list Deutsche Bahn on the stock exchange."

Assets of the group include its international freight operations using both trucks and trains, inter-city express (ICE) bullet trains serving major German cities and metro rail networks.

In May this year the company opened the jewel among its stations, a glistening glass-and-steel interchange in the heart of Berlin.

The rail company's CEO, Hartmut Mehdorn, has cajoled the government to let in private investors so he can obtain investment funding to expand.

The retention of state rights to the track was a key demand of the Christian Democrats, whereas the Social Democrats (SPD) opposed any British-style separation of the railtrack and the rolling-stock businesses. The compromise is expected to satisfy both parties.

Efforts aimed at privatizing the federal railway began in 1994 and since then a staggering 213 billion euros (272 billion euros) of state money has flowed into the railways.

The results have been sobering with just 12.4 per cent more people using the train to travel in the period from 1994 to 2005. The number of people taking the train for longer trips actually fell by 3.5 per cent during this period.

Last year the amount of freight carried by the German railway company declined by 1 per cent compared with 2004.

"The 213-billion-euro disaster," was how the newspaper Die Welt headlined a story Wednesday on Germany's railway privatization bid.

DPA

Subject: German news

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