Greek Parliament Passes Railway Privatization Law

 

ATHENS -(Dow Jones)- The Greek parliament Tuesday passed a law to restructure and privatize the heavily indebted Hellenic Railways, OSE, amid continuing strikes from workers at the organization.

OSE has debts to the tune of EUR10.7 billion and costs the Greek taxpayers about EUR1 billion a year to keep afloat. Its speedy privatization is an important promise given to the International Monetary Fund and European Union in exchange for the EUR110 billion bailout in May to stave off bankruptcy.

The law envisages that OSE's workforce will be slashed from the current 6,000 to 3,700 employees. Some will take early retirement, many will be transferred to other public service jobs, but no one will be fired.

The Minister of Transport, Dimitris Reppas, argued that: "We cannot accept that the revenues of the OSE are EUR106 million but wage costs are EUR116 million for 2009."

The railways will have to cut loss-making activities and routes. But there will be at least EUR180 million state subsidies for lines considered strategically important, even if they are not economically viable.

The law will also put in place a framework for exploiting OSE's very considerable real estate assets, worth several billions, to offset part of the cost of the state assuming all of the debts of the organization.

OSE has been plagued for decades by political intervention and patronage jobs.

The ruling PASOK socialist government intends to deliver a revamped railway operator TrainOSE next year, which will be marginally profitable and then hopes to attract serious interest because it also plans to sell a 49% stake with potential management rights.

But unions are determined to resist such efforts and have called an ongoing week-long strike and also held a protest Tuesday in downtown Athens. The unions are resisting the transfer of personnel to other public sector roles, and they are against any wage reductions or possible cuts to pension entitlement.

The Panhellenic Federation of Railway Workers said it will challenge this new law in European courts.

source: Capital