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Making 2010 the year for accomplishments

Posted: 28 January 2010 | | No comments yet

Like in the case of all European railways recently, the global recession found its reflection in freight transport volumes, which in 2009 decreased by 24% in comparison with 2008. Passenger transport increased by 4%, but its increase is much smaller than those recorded in recent years, when passenger transport was up at the rates of 10 to 20%. There was a reduction in earmarked state budget funds and revenue from goods transport. Mid-February saw the top HŽ executive relieved of duty, therefore Mr. Zoran Popovac, M.Sc., took over the management of HŽ Holding from Mr. Davorin Kobak. Shortly after his arrival, saving measures and rationalisation of business operations were introduced, together with models aimed at improving liquidity within the HŽ system.

Like in the case of all European railways recently, the global recession found its reflection in freight transport volumes, which in 2009 decreased by 24% in comparison with 2008. Passenger transport increased by 4%, but its increase is much smaller than those recorded in recent years, when passenger transport was up at the rates of 10 to 20%. There was a reduction in earmarked state budget funds and revenue from goods transport. Mid-February saw the top HŽ executive relieved of duty, therefore Mr. Zoran Popovac, M.Sc., took over the management of HŽ Holding from Mr. Davorin Kobak. Shortly after his arrival, saving measures and rationalisation of business operations were introduced, together with models aimed at improving liquidity within the HŽ system.

Like in the case of all European railways recently, the global recession found its reflection in freight transport volumes, which in 2009 decreased by 24% in comparison with 2008. Passenger transport increased by 4%, but its increase is much smaller than those recorded in recent years, when passenger transport was up at the rates of 10 to 20%. There was a reduction in earmarked state budget funds and revenue from goods transport. Mid-February saw the top HŽ executive relieved of duty, therefore Mr. Zoran Popovac, M.Sc., took over the management of HŽ Holding from Mr. Davorin Kobak. Shortly after his arrival, saving measures and rationalisation of business operations were introduced, together with models aimed at improving liquidity within the HŽ system.

However, even more difficult problems soon outweighed the existing ones. In July 2009, the worst railway accident since Croatia’s proclamation of independence in 1990 happened. It was a moment which changed many things, but most of all, it changed us. However, we had to turn to the future. The accident prompted a change in management, which meant that starting from 1 August 2009, I took over the post of managing HŽ Infrastruktura, the biggest of four HŽ Holding companies, from the former HŽ Infrastruktura Management Board President, Mr. Mijat Kurtušić. When we took a look ahead, we noticed a small number of projects that were in preparation, but in some areas the need to intensify line maintenance investment was also needed. Several reasons can be found for this; the most frequently stated being funding. Still, money can only be a limiting factor; we have to turn inward and ask ourselves whether the things we have prepared are good enough for us to commence projects. The reality is that in this organisational form, HŽ Infrastruktura has existed for three years now, and ahead of us still lies a complex path of mutually setting boundaries of relations towards operators and defining relations as clearly as possible with the rest of the sector.

Detail showing works performed on the traction system substitution at Moravice station

Detail showing works performed on the traction system substitution at Moravice station

The need for an entrepreneurial structure

In order to clarify our relations after the division of the national railway company, we also require more work continuity. Permanent and frequent management changes open up new problems all the time, without bringing solutions. Continuity means that the achievements of the restructuring process so far should be revised. I am of the opinion that we have a variety of available measures and means, but they need to be rated as to their value and benefit. We need time to organise ourselves in a more entrepreneurial manner, because it is worth striving for. We will have to start behaving in a more entrepreneurial way than previously, for we have an excellent geo-strategic and transport position. If we and the Croatian operators are not enterprising, users will go where they are received better, i.e. to those who provide them with better technical and commercial transport conditions.

HŽ Infrastruktura is relying on financing from the state budget. HŽ Infrastruktura has to increase its revenues, which is only possible if it offers good projects to the market (European banks and funds). The amount needed from the state budget can be reduced by the amount of resources that are gained from these sources. Two years ago, the Republic of Croatia concluded a beneficial contract with us regarding maintenance of railway infrastructure. In the future, we will determine clearer boundaries between works financed by the state, which will assist us in more proper division of our core business – which is track access. Returns in the areas of maintenance and regulation will, in my opinion, decrease substantially, while for the investments segment I expect a successful ‘overturn’ of the existing state with projects which have the required building permits and which will satisfy not only the state budget, but also the financial market, and especially EU funds, from which we receive great support. We are requesting funding where we have realistic prospects of obtaining it, because we hold responsibility for the realisation of plans contained in the National Railway Infrastructure Programme.

Motif from line section between Dugo Selo and Novska, on which the IPA fund is to finance drawing up of a preliminary project for reconstruction of single-track section Dugo Selo and Novska

Motif from line section between Dugo Selo and Novska, on which the IPA fund is to finance drawing up of a preliminary project for reconstruction of single-track section Dugo Selo and Novska

Transparency in public procurement

Following my arrival at the top of HŽ Infrastruktura, we launched a number of projects aimed at improving business operations. I am especially proud of starting the public procurement portal at the end of 2009, which was the first such portal in Croatia. The public procurement portal is an internet website: www.hznet.hr/javnanabava, where users can be informed of procurement procedures carried out within HŽ-Infrastruktura d.o.o. There are primarily notices regarding the start of procurement procedures, procurement subject, dates of publication in the electronic public procurement classified ads (EOJN), opening of bids, selection of bidder and cancellation of public procurement procedure as well as the date of contract conclusion with the chosen bidder. Beside notices, the user can view documents on the website connected to procurement subject, and is thus provided with a complete and detailed insight into the course and duration of the procedure, procurement price and reasons for choosing, or not choosing, a specific bidder in the procurement procedure. Publishing public procurement procedures on a website available to everyone makes procedures within HŽ Infrastruktura completely transparent. This enables everyone access to information and insight into how public finances are spent, which completely closes the door to all types of corruption.

Modernisation and building of railway infrastructure in 2010

Although the plan of investments in 2010 is currently being adopted, at this moment it can be said that – due to financial crisis – the plan will significantly deviate from the values foreseen by the National Railway Infrastructure Programme for the 2008-2012 period. The amount of investment for modernisation and building of railway infrastructure will approximately reach €120 million, out of which the entire amount will be mostly allocated to projects started in the previous period (the substitution of electrical traction on the existing Rijeka line being the most significant of these), co-financing of projects initiated through IPA and ISPA pre-accession funds (current projects: reconstruction of Vinkovci-Tovarnik line; also planned for 2010: beginning of substitution of safety-signalling devices on Zagreb Main Railway Station and reconstruction of the Okučani-Novska section) and projects connected directly to transport safety (for example securing level crossings etc.).

Project of electrical traction substitution on the Moravice-Rijeka-Šapjane section and Škrljevo-Bakar section

When talking about the project of system substitution, I have to mention its great complexity. In 1975, the substitution of the DC system on the Zagreb to Rijeka line was considered, and in 1978 the first technical documentation was drawn up. Concrete works began in 1985, and the first substitution stage of a 138.7km-long system was completed on 25 May 1987. Since then, the section from the Zagreb Main Railway Station to Moravice is in regular operation and consists of an AC electrical traction system, 25 kV, 50 Hz single-phase. In the meantime, a great deal of time was lost, due to unfortunate years of the Croatian War of Independence as well as non-investments in railways, so the works on system substitution were not resumed until 2007. The same system is needed on the entire Rijeka line, because this means that a single electrical traction system will be achieved on the entire territory of Croatia. This will result in speeding up traffic operations and increased line capacity, since no further locomotive replacement is required on the interface of two systems. Better use of locomotives will be achieved, traction sections prolonged, and change of staff will be better connected. Considering the fact that the AC system is more economical, costs of energy and maintenance will decrease, identification and malfunction repair will be faster and the number of employees reduced. The completion of these works will see a raised level of usage parameters on this oldest Croatian electrified line. It is also a matter which presents a great challenge for contractors. The deadline for completion of works is the end of 2010, when HŽ Infrastruktura is to obtain a single electrical traction system of 25kV, 50 Hz, with all the advantages of such a system. Croatian companies will acquire references to compete for new line electrification projects in Croatia and on the world market.

EU funds

In the 2005-2006 period (withdrawal of funds by the end of 2010), there is a pre-accession instrument at disposal for transport infrastructure, namely the ISPA (Instrument for Structural Policies for Pre-Accession), in which €60 million has been earmarked for co-financing infrastructure projects concerning transport and environmental protection. Within the scope of this project, HŽ Infrastruktura proposed, and the Ministry of the Sea, Transport and Infrastructure adopted, the project regarding the renewal of the Vinkovci-Tovarnik-state border line as a part of the Pan-European Corridor X – the most important transport corridor which passes through Croatia.

The intervention encompasses a complete renewal of a 33.5km-long double-track railway line; substructure and superstructure material replacement, renewal of 12 water ducts, securing level crossings, new safety-signalling devices for line security (the most modern equipment for train movement monitoring is being installed for the first time in Croatia, of the co-called ETCS Level 1) and reconstruction of several stations and stops.

The total investment value is approximately €65 million, out of which €28.8 million was secured from the ISPA programme. The project is currently carried out by means of two works contracts, the first and bigger of which is the construction and track works and 90% has been completed. There is also a contract regarding works on securing the railway line and station, in the scope of which preparation and designs were completed, and fieldwork started in July 2009. Planned project completion is the end of 2010. Considering the current course of works, no major delays are to be expected.

HŽ Infrastruktura is the so-called ‘end-user’ in the implementation of ISPA projects, in charge of the technical side, while the Central Finance and Contracting Agency for EU programmes and projects is entrusted with carrying out tendering and contracting.

In the 2007-2009 period (withdrawal of funds until the end of 2012) a new pre-accession instrument is available for transport infrastructure, namely the IPA (Instrument for Pre-accession Assistance), in which €53.5 million has been allocated for the transport sector (IPA Component IIIa, Regional growth-Transport).

Beside railway projects, within the planned period, the programme also encompasses inland shipping, however, railways are receiving a bigger part of funds, which amounts to €47.1 million. In 2008, HŽ Infrastruktura acquired accreditation for IPA projects implementation; thus from a user becoming an implementing body, so that it carries out tendering, concludes contracts and implements projects on its own.

The following three projects will receive funding within the IPA 2007-2009:

  1. Renewal of the Zagreb Main Railway Station safety-signalling system – the project is in the tendering stage. Contracting is planned for the first half of 2010 and works are to commence at the beginning of 2011.
  2. Renewal of the railway line on the Novska-Okučani section – the project documentation is currently being drawn up and permits are being obtained. Tendering is planned in 2010, and works in the spring 2011.
  3. Drawing up of preliminary design for the reconstruction of single-track line between Dugo Selo and Novska – the tendering documentation is being prepared for an international project planning tender.

At this point it should be emphasised that HŽ Infrastruktura is fully aware of the fact that, upon Croatia’s accession to the European Union, a major (and perhaps only) part of financial resources for more serious infrastructure projects will come from EU funds. From a unit established at the end of 2005 consisting of four people who were preparing the project of one line section renewal, which is currently being successfully implemented within the ISPA pre-accession fund, today there are 15 employees within HŽ Infrastruktura who work on the implementation of projects financed from pre-accession funds. In the near future, we intend to attract and enable a sufficient number of experts who will be able to prepare and implement projects in accordance with EU regulations and procedures. On the other hand, we actively take part, together with the relevant Ministry, in drawing up documents (operative programmes) which will define projects to be financed from EU funds in the next planned period. In this way we are attempting to prepare and ensure the achievement of goals set out in the National Railway Infrastructure Programme, as well as obligations undertaken by the Republic of Croatia, which are contained in Chapter 21 within the pre-accession negotiations (Trans-European network).

This year, Croatian Railways will mark the 150 year anniversary of the opening of the first railway line in Croatia. I am expecting at least two things to happen in this anniversary year; one of them is achievement of successful organisation regarding regular infrastructure maintenance, in compliance with European traffic safety standards, and the other is drawing up a list of priority projects with their own logic. This means that one project will lean on another with a sequence in which a result will be accomplished with each new project. That is precisely what makes a safe and modern Croatian railway infrastructure network, one which is able to respond to all users’ demands on the liberalised market.

About the author

Branimir Jerneić

Branimir Jerneić

Branimir Jerneić graduated from The Faculty of Transport and Traffic Engineering of the University of Zagreb, and is currently attending a PhD programme at the same university. From 2002-2004, he worked as assistant lecturer of the same university. From 2004-2008, he held the position of Assistant Minister at the Directorate for Railway Traffic of the Ministry of the Sea, Tourism, Transport and Development. From 2008-2009, he worked as State Secretary for Rail Transport at the named Ministry, and on 1 August 2009, he was appointed President of HŽ Infrastruktura Management Board. Since 2005, he has been a member of the Negotiating Team for the Accession of the Republic of Croatia to the EU for the negotiation chapter ‘Transport Policy, Rail Transport’.

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