Rail freight in Romania is currently undergoing a massive overhaul with the transition from CFR Marfă to the new state-owned operator Carpatica Feroviar (CF). Not everyone in the country, however, is a fan of the initiative and fears of sanctions from the European Union are beginning to surface. The most recent alarm was sounded by the Romanian Economic and Social Council (CES).
CES is tasked with the approval of some draft normative acts and the elaboration of analyses and studies on behalf of the state. It also warns about the emergence of economic and social phenomena that require action. The body is now contesting the decision to include over 400 million euros (two billion lei) in the state budget for 2025 to cover CF’s current and capital expenditure. “This measure raises several significant issues”, CES pointed out.
Creating a vicious circle?
First, this might lead to Romania avoiding obligations imposed by the European Commission, which ruled that CFR Marfă enjoyed illegal state aid. Similarly to what is happening in France, CF is meant to replace CFR Marfă, which is unable to repay the debt. On the other hand, this transition left many wondering whether it would concretely put a stop to illegal state aid and solve the issue.
“The creation of the new company and the takeover of the assets risk being seen as an attempt to avoid this obligation, which may trigger the obligation to repay the respective sums and may exacerbate the existing problem”, CES stressed. If Romania fails to implement the decision made by the Commission, moreover, the country could also be subject to infringement proceedings and possible additional penalties.
‘Money should go elsewhere’
According to the CES, using these hundreds of millions of euros to increase CF’s capital “raises questions about the State’s strategic priorities in the railway sector”. The body recommends that the funds should be deployed for other purposes, including funding much-needed maintenance works on the rail infrastructure and modernising the rest of the network.