Government of Montenegro announces privatization of railway sector – Rationalization of expenditures and change of internal organization to follow

The Government of Montenegro should make additional efforts in order for the privatization of the railway sector to take place, says the document titled “The Strategy of Development of Railways in the Next Ten Years”.

The Government's document, adopted at the session held in late March, cites as the reason for making the decision the fact that the railway sector has been characterized by negative balances, insolvency and excessive indebtedness, but also by mutual claims, which negatively affect the operations of those companies, reports the Radio-Television of Montenegro, citing Dan.

As stated, the railway sector needs to be made more attractive to private capital by introducing competition in the network, creating recognizable independence of the regulatory body, as well as by increasing the productivity of the railway sector through an individual approach to companies, where the activities are to be run by the majority owner, or the Government.

– The halted process of restructuring railway companies needs to continue through professionalization of management and a change in criteria, the change of technology and internal organization towards the market, through enhancing human resources – the document adds.

Furthermore, the number of employees needs to be harmonized with the scope and the productivity of railway companies relative to the competition and the regional average, the document says.

The strategy says that the Government has been planning to privatize railway companies since the restructuring of the formerly unified Railway, as it estimates that the problems in the railway sector should be solved through privatization of nearly all parts of the system, except for traffic regulation.

Following an unsuccessful tender for privatization of Montecargo, the privatization process was halted, and there have been no attempts to privatize other activities or companies, the document reminds.

The restructuring, conducted in the period from 2008 till 2010, encompassed the vertical division of the company in line with the activities and the taking over of debts by the state, but the newly formed companies failed to produce considerably different business results in the ensuing period. All the companies had negative operating balances from 2012 till 2015, except for Montecargo in 2015.

This proves that the restructuring has not been completed.

The second phase of restructuring should encompass the so-called operational restructuring, such as rationalization of expenditures, layoffs, closing or integration of operating units, preparation of new internal organization of newly founded companies, optimization of operating processes and professional management, the document says.

Vlada Crne Gore

Government of Montenegro

Montenegro Railway

Montecargo

Strategy of Development of Railways in the Next Ten Years

privatization of Montenegro Railway