The project development objective is to improve the operational efficiency and the financial sustainability of the public railway sector in Croatia.
Railway passenger services are used daily by around 100,000 users who depend on its timeliness and reliability mostly for professional and education purposes. More than 65 10 Report 77630-HR, June 2013. 7 percent of passengers are student and employees, while elderly represent a third critical category of users. Based on qualitative evidence the services are mostly used by the bottom 40 percent of the population, though no statistical study has been carried out in Croatia in relation to revenue.
Railway represents the only public transport access in some areas in Northern Croatia and to reach Zagreb from some suburban zones.
Railway cargo services are crucial to the country’s competitiveness which is placed along a logistics transit route connecting Central and South East Europe, and are currently used by major heavy industries in the country. From the experience of other member states, despite EU accession or liberalization of the cargo market, the historical operator usually retains a large share of traffic after market opening.
The attempt of the Government to concession a second container terminal in Rijeka confirmed that global logistics operators require as a minimum, good railway connectivity to ports and logistic centers to carry out key investment. In that respect, reinforcing the railway system in Croatia helps secure supply of Southern European countries (Serbia and Bosnia and Herzegovina for example), which have fewer alternatives than Hungary or other Central European countries for their external trade routing by railway. As a result, most of the population and industries of these countries
can be considered as project’s indirect beneficiaries.
The staff in MMATI, HZI, HZC and HZP are also direct beneficiaries of the project activities. The three companies together without subsidiaries employ more than 9,000 employees as of Dec 31, 2014. The project may finance retrenchment and restructuring, but should contribute to maintain the companies in operations and improve skills. The departments in the MMATI overseeing the sector represent 20-25 people who would directly benefit from capacity building under the project. Around 15 percent of these staff are women.
The project finally benefits the overall population given its indirect benefits on the state’s treasury as it limits the financial risk for the Government.
The support to sector reform should in the long term ensure more sustainable sector investment planning and management, based on a thorough investment prioritization, combination of financing from different sources. Moreover, the reform supported by the project should improve or limit operating subsidies.
The project comprises four components:
Component 1: Project Coordination and Sector Policy Support (EUR 2.6 million, including IBRD financing of 100 percent)
Component 2: Support to HZ Passenger Transport Restructuring (EUR 52.4 million, including IBRD financing of EUR 43 million)
Component 3: Support to HZ Cargo Restructuring (EUR 47.6 million, including IBRD financing of EUR 41.5 million)
Component 4: Support to HZ Infrastructure Restructuring and Enabling Investment to Increase the System Efficiency (EUR 76.4 million, including IBRD financing of 100 percent)