ECONOMY

Hellenic Railways to reverse restructuring as part of an urgent drive to stem growing losses

The government is reversing a relatively recent restructuring of Hellenic Railways (OSE) in an attempt to narrow the biggest drain of losses among Greece’s 48 state-run companies. The re-merging of the various units resulting from the break-up of the company that came into effect on January 1, 2007, is seen as a last resort toward ending the administrative inflexibility which seems to have cost an already huge loss-maker even more money. The new scheme will comprise three entities, the parent company OSE, which will absorb its former infrastructure and real estate subsidiaries, its rolling stock arm (TRENOSE) and its construction arm (ERGOSE). The regrouping will primarily aim to achieve a more rational management of human resources, the urgent modernization of services and a more efficient utilization of the company’s real estate assets, estimated to be worth about -5.2 billion. The utility has launched a full-scale review of loss-making routes, with a view to possibly cutting out some of them. At present, the only profitable passenger route is that between Patras and Thessaloniki via Athens, while some cargo routes are beginning to show a more positive picture. It is also looking into alternative ways of financing some routes, such as their characterization as services of public interest which would open the way for their subsidization by the state according to European Union regulations. The Transport Ministry is seriously concerned about the management of OSE’s human resources, as there seem to be manpower shortages in some departments and surpluses in others. The utility’s organizational chart provides for 9,300 positions but only 6,900 are staffed today. Strong emphasis will be placed on the urgent modernization of services, so that cost-cutting may be combined with more attractive and faster services. The utility currently operates factories for idle equipment or material that is to be soon withdrawn, such as diesel engines. OSE’s business plan for improving its real estate assets includes sales, partnerships with private operators and a review of rents. It is estimated that the utility owns more than 3,500 land plots, totaling 12,500 hectares, and more than 4,500 buildings, making it the second-largest landowner in the country after the Church of Greece. Rent from property last year totaled -2.7 million, when OSE’s debt is estimated into the billions.