In an effort to end the strikes set off in the past two months by rail unions against reforms initiated by President Emmanuel Macron, the government in Paris has announced that it could delete EUR 35 billion out of a total of EUR 47 billion, SNCF’s debt to the State.
The condition for clearing the amount would be to implement measures to make SNCF more efficient in terms of operating costs. The proposal was put forward by French Prime Minister Edouard Philippe and remains to be seen if the unions will accept it. The final vote will take place in June 2018.
If everything goes according to the plans, the French state would clear EUR 25 billion in 2020, following that, in 2022, it would remove the remaining EUR 10 billion. Most of SNCF’s huge debt was generated by massive investments in the TGV network and by neglecting the conventional and intercity rail networks.
The triggered strikes were a response to President Macron’s ambitions to restructure SNCF, revise the social status of French railway workers, liberalize the internal rail passenger market, and a series of investments meant to improve overall industry national railways.
Reform measures announce that as of 2020, SNCF will become a public company, with two subsidiaries SNCF Réseau and SNCF Mobilités. According to the adopted reform plan, Fret SNCF (the railway freight and logistics operator) will be restructured and will be included as a subsidiary of SNCF Mobilités. Fret SNCF will be wholly owned by the state, although before the reform the French government announced that it did not intend to hold any capital in this company. Fret SNCF currently has a debt of EUR 4.3 billion and if no concrete measures are taken, it could amount to EUR 5.1 billion by 2020. It is assumed that restructuring will result in more financial transparency.
In addition, the French rail market will be open to competition, a measure aimed at improving the overall quality of the sector. Competition will be allowed in the form of open access market as well as through franchised operations, although open access competition will not start earlier than 2020. Regional operators will be able to bid on transport paths shortly after December 2019.
We recall that earlier in April, both the Government and President Macron advanced the idea of clearing a substantial part of SNCF’s debt, but so far, until this month, no exact figure had been reported.