ECONOMY

A vital loss-maker

ZAGREB (SeeNews) – The landlocked Former Yugoslav Republic of Macedonia (FYROM) needs $279 million to complete the building of a railway linking its infrastructure with Bulgaria’s and providing access to the Black Sea, a railway company official said. «So far we have invested $123 million from the state budget in different sections of this railway, but we need further $279 million to complete it,» Stojan Naumov, manager of state-owned railway company Makedonski Zeleznici (MZ) in charge of marketing and trade, told SeeNews on the sidelines of a conference here last week on railway investments in Southeastern Europe. The railway will be some 90 kilometers long, running from Kumanovo in northern FYROM, near the capital Skopje, to the border with Bulgaria. It will be part of pan-European Corridor 8, running from the Bulgarian Sea ports Varna and Bourgas, via Skopje, to Durres on the Albanian Adriatic Sea coast. The 10 pan-European transport corridors were defined in the 1990s as routes in Central and Eastern Europe that required major investment over the next 10 to 15 years. For the countries in Central and Eastern Europe the development of these corridors means improvement of infrastructure, possibilities to boost trade and create new jobs. For FYROM, the development of Corridor 8 will mean access to maritime transport. Railway construction in FYROM started in 1994 but has been at a standstill for the last two years because of a lack of funding. Separate sections of the railway are at different phases of construction and the construction of some of them has not started as the government could not provide money. «We will try to find funding by all means to continue the construction of the railway and to complete it with the aim of having connections between the Black Sea and the Adriatic Sea,» Naumov added but gave no time framework for the completion. As financing options he mentioned loans or a concession. The MZ railway’s cargo traffic last year rose 21 percent on higher demand of local companies for transport services and is expected to rise by a further 15 to 20 percent in 2006, Naumov said. MZ plans a 5.5-million-euro investment in railway infrastructure as a step toward raising the maximum speed on its railways to 160 km/h from the current 100 km/h. It also plans 7.5-million-euro investments to start a gradual upgrade of the railway rolling stock. These investments will be financed through a 15-million-euro loan from the World Bank. An agreement for the loan was signed earlier this month and will be absorbed within five years. The rest of the funding through the loan will be used to for social programs and research. The company does not plan other investments at present. The FYROM government will take a decision by the end of April on whether to split the MZ into an infrastructure company, which will remain in state ownership, and a transport company, which will be privatized later. MZ (www.mz.com.mk) is one of the largest loss-makers in the country. The company’s debt at the end of 2004 totaled 143 million euros, equal to about 3.3 percent of FYROM’s GDP. «Like all railway companies, we are operating at a loss but I hope it will be halved in each of 2005 and 2006,» he said. The company was expected to report 2005 results yesterday.