Croatia became the 28th member state of the European Union. After Slovenia, it is the second member state of the EU in the former Yugoslavian bloc. The government in Zagreb expects a 1.8% economic growth in 2013, while the International Monetary Fund launches an advance of just 0.75%, after a contraction of 1.5% in 2012. Croatia is passing through the second recession of the past years, following the austerity measures and the drop of investments caused by the European credit crunch.
At the beginning of the year, the three well-known rating agencies Moody’s, Standard & Poor’s and Fitch Ratings gave Croatia negative perspective in the safety of investments indicator, Bloomberg announced.
“The government’s capacity of rebalancing the economy through exports is limited. The accession to the European Union is a step forward even if the difficult European economic environment and the government’s inertia in reforming will probably limit benefits”, shows a press release of Moody’s quoted by Mediafax.
However, a World Bank report shows that the Adriatic Sea country has an increasing and competitive economy, as well as the right institutional capacity to face the challenges of being a EU Member State.
Maybe Croatia is not the best in economic policies, but wants to turn into account its EU accession and focuses on absorbing non-reimbursable EU funds for redefining and upgrading the transport sector. Transport counts for 8% in Croatia’s gross domestic product.
Croatia is crossed by four pan-European transport corridors, of which three railway corridors, X, Vb and Vc, the fourth being the pan-European corridor VII – Danube, and the authorities have carried out complex investment programmes to develop its sections in the three transport corridors. The Croatian Government develops significant investments for its share in the pan-European corridor X.
However, public money went to the road transport sector, so that the railway sector is currently facing significant challenges requiring major investments in order to be fully integrated into the trans-European transport network.
The Railway Company in Croatia has passed through significant organisational changes, currently being divided into five individual companies: HŽ Holding, HŽ Passenger Transport, HŽ Cargo, HŽ Infrastructure and HŽ Traction.
In 2010, the three railway companies in Croatia HZ), Slovenia (SJ) and Serbia (SZ) decided to establish Cargo 10 company which seeks to increase transport in the pan-European Corridor X, but also to increase freight transport in the three signatory countries. The company is based in Ljubljana, Slovenia. Last spring the three countries said they would speed up the implementation of the joint railway freight transport project, Cargo 10. The JV will elaborate a project containing proposals for the development and intensification of activities within Cargo 10. Then the countries will agree on a joint position in this matter. However, to improve the efficiency of the project, the representatives of the Slovenian operator propose to invite the companies in FYR Macedonia and Italy to join the project.
Dedicated to the support of railway reform
Croatia Railways is still in a transition period, the process of restructuring and privatisation of certain parts is not fully completed due to the lack of clearer strategies on the future railway actions.
Towards the end of 2012, the Croatian Government ordered the Ministry of Transport to initiate the procedure of identifying a strategic partner for the railway freight transport operator HZ Cargo, shows a press release of the ministry. The ministry has thus been authorised to initiate the procedure of getting expressions of interest from the strategic partners interested in the restructuring of this company and in a potential change of the shareholding structure. Then in 2013, the government in Zagreb announced its intention of selling the national railway freight transport operator, HZ Cargo.
The expressions of interest have been submitted by Croatian companies such as DEAL, Nexus Private Equity Partneri, Quaestus Private Equity and Djuro Djakovic Holding, but also by foreign companies such as T Kearney GmbH; Rail Cargo Austria AG, DB International GmbH and Advanced World Transport B.V. Private operator Grup Feroviar Român has also expressed intention to participate in the sale of HZ Cargo.
The Commission which supervises the tender will analyse offers and then consultations will follow, but so far no actual step has been taken.
HZ Cargo carries around 11 million tonnes of freight every year and has a rolling stock of 187 locomotives and 6,039 wagons.
Croatia has efficiently initiated and continued the process of aligning the national railway legislation to the European legislation. The latest report of SEETO, from late 2012, reveals that over the past years, the Croatian railway sector has significantly changed due to the implementation of the Railway Restructuring Plan, initiated in March 2012.
According to this recovery plan, Croatia will fully liberalise the railway transport services after the accession to the European Union. The same SEETO report shows that the most comprehensive restructuring plan of the state-owned company could be fully implemented in 2017, when the Croatian railway system, currently counting for 17,000 employees, will be reduced at 4,500 employees, the condition being to fully achieve the investments in plan and the modernisation of the railway system.
Croatian infrastructure manager HZ Infrastruktura plans to invest EUR 2 Billion in the national section of Corridor X by 2020 to align it to European standards. By the end of 2020, the Croatian section of Corridor X will be upgraded to permit the traffic of trains at speeds of up to 160 km/h, will be fully doubled and equipped with GSM-R.
Some sections have already been upgraded, others are underway and others are in the design phase and could be included in the applications for EU funds in 2015.
Major investments have been carried out over the past years for the improvement and modernisation of the railway infrastructure and therefore there are railway sections where the traffic speed is 120-160 km/h on sections such as Zagreb – Novska – Vinkovci. Over the past year, the World Bank report say, 756 kilometres have been upgraded. For 2013, the infrastructure manager plan to implement several projects on the reconstruction and modernisation of the Zagreb-Sisak route, part of Turopolje-Velika Gorica line, Sisak-Petrinja and Sisak-Caprag-Novska lines. Moreover, over the next year, the company will launch projects for the reconstruction of the railway tunnels in the Sisak region.
Due to its geographical position, Croatia has a significant importance in setting efficient transport links between Western Europe in the Balkans area and links between Central Europe and the basin of the Adriatic Sea and the Mediterranean Sea. Croatia has direct connections with Hungary, Serbia, Slovenia and Bosnia and Herzegovina.
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