{"id":449201,"date":"2021-02-13T18:53:53","date_gmt":"2021-02-13T18:53:53","guid":{"rendered":"https:\/\/www.moldova.org\/en\/?p=449201"},"modified":"2021-02-24T20:24:27","modified_gmt":"2021-02-24T20:24:27","slug":"on-the-verge-of-insolvency-who-is-interested-in-bankrupting-the-state-owned-railway-operator-from-moldova","status":"publish","type":"post","link":"https:\/\/www.moldova.org\/en\/on-the-verge-of-insolvency-who-is-interested-in-bankrupting-the-state-owned-railway-operator-from-moldova\/","title":{"rendered":"On the verge of insolvency: Who is interested in bankrupting the state-owned railway operator from Moldova?"},"content":{"rendered":"Reading Time: <\/span> 4<\/span> minutes<\/span><\/span>

“A journey to the past”<\/em> – this is how Moldovan trains are called. They are old, cold, very slow, but also extremely cheap. Trains and railway stations are like museum exhibits. A lot of them are not decommissioned due to the lack of an alternative. Still, anyone born in the 90’s or earlier has some childhood memories related to this means of transportation.<\/p>\n

\"\"

Inside a Soviet train\u00a0 Source: train-photo.ru<\/p><\/div>\n

SOE “Calea Ferata a Moldovei”<\/strong> (tr. as Railway of Moldova) is the only railway operator in the country (both passenger and cargo transportation). The company’s management announced, at the beginning of February, their intention to interrupt the service of all local and suburban trains starting February 12 in order to cut down operating expenses, as well as sell old metal equipment and some fixed assets to raise money and pay outstanding wages, as being mentioned<\/a> in the recovery plan approved by the Board of Directors, which was presented in front of all Members of Parliament (MPs).<\/p>\n

“We noticed that these shipments only bring losses, no one subsidises them, no one finances them. Moreover, these suburban trains are outdated and dangerous to passengers. It gets really hot in the summer and no one can guarantee that there will be no fires on these trains,”<\/em> said acting General Manager of the state-owned enterprise (SOE), Adrian Onceanu<\/strong>. Later on, the SOE administration denied that such measures would have to be implemented, claiming that this was just a proposed option.<\/p>\n

The root causes<\/h3>\n

Current financial problems of SOE “Calea Ferata a Moldovei” (CFM) are actually more than a decade old. Already in 2019, there were premises for bankruptcy of the company. The corporate financial reports<\/a> for 2019 displayed a net loss of 26.5 million lei<\/strong> (more than 73 million lei in 2018) and a total debt of 464 million lei<\/strong> (569 million lei in 2018). About 33 million lei were recorded as unpaid wages, which represented 14% of company’s current liabilities<\/span>. At the end of 2020, the total debt of the SOE amounted to 459.4 million lei<\/strong>.<\/p>\n

According to the company data, 70% of commuter train passengers are railway workers who travel for free.<\/p><\/blockquote>\n

In December 2020, the railway workers started protests because they had not been paid for several months. As the chairman of the railway workers’ union told<\/a> NewsMaker, almost 7000 employees didn’t received their salaries since September 2020<\/span>, the total amount of the debt amounting to at least 60 million lei. The state-owned enterprise has a shortage of funds because of the debt to the state budget (23.5 million lei as unpaid taxes for October and November 2020), the coronavirus pandemic consequences, as well as high cargo transportation costs for international routes that have to make big detours in conflict zones (Ukraine, for example).<\/p>\n

Last spring, CFM stopped its international passenger traffic due to the pandemic and cancelled some of the most important domestic passengers routes. Only a few routes to the north and east of the country remained. That cut down from the company’s revenue even more.<\/p>\n

At the end of 2019, SOE “Calea Ferata a Moldovei” had 7099 employees. Nowadays, the company has around 6000 employees.<\/p><\/blockquote>\n

What’s more, the company employees have been experiencing periods of not receiving their wages for 6 years in a row. That is beside the fact that their wages are among the lowest in the country. The company data<\/a> for 2016 (the most recent available) showed that the average salary for a transportation worker was almost 4000 lei (190 euros, according tot the current exchange rate).<\/p>\n

No Government help for a state-owned company<\/h3>\n

CFM asked the Government for help with paying salaries, especially during the pandemic period, when a part of the SOE activity was closed down. As the representatives of the railway workers’ union claimed, there were nothing more but promises.<\/p>\n

On the contrary, the state tax service institution has blocked some accounts of CFM in order to partially cover the company’s debt to the state budget.<\/p>\n

A parliamentary commission was formed for investigating the situation at the Moldovan railway company. The commission is supposed to submit a final report at the beginning of April. Not all MPs were convinced of the commission’s usefulness though, claiming that\u00a0bankrupting the SOE and selling it for nothing is what actually is intended<\/span>. Also, the SOE management made accusations, stating that certain political forces used accounting figures for manipulating and aggravating the situation even further.<\/p>\n

Media coverage, employees’ protests, as well as the debates in Parliament have stimulated creditors to claim the outstanding amounts, asking the court to block the accounts of CFM.<\/p>\n

While trying to contain the panic, the company management made several statements, saying that, despite the difficulties, CFM is following an established comprehensive program of reorganization and modernization of the railway infrastructure financed by European partners. According to them, the implementation of the plan began to deliver results: purchase of new locomotives, rehabilitation of infrastructure and purchase of automated equipment. “We rely on your understanding and we assure you that if no artificial obstacles are created, CFM will return to the development path,”<\/em> said, Vitalie Mucan<\/strong>, Deputy Director for Strategic Planning.<\/p>\n

Economist of the Expert-Grup Analytical Center, Stanislav Madan,<\/strong>\u00a0believes<\/a> that all political parties that ever controlled this strategic enterprise tried to gain material benefits. “The only difference is that, before, there were more resources and higher workloads. Now, they have all declined. Therefore, the thefts are more visible.”<\/em><\/p>\n

Photo: unknown<\/p>\n","protected":false},"excerpt":{"rendered":"

Reading Time: <\/span> 4<\/span> minutes<\/span><\/span>“A journey to the past” – this is how Moldovan trains are called. They are old, cold, very slow, but also extremely cheap. Trains and railway stations are like museum exhibits. A lot of them are not decommissioned due to the lack of an alternative. Still, anyone born in the 90’s or earlier has some […]<\/p>\n","protected":false},"author":31,"featured_media":449205,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5,6,4,56],"tags":[983,80,35,984,27,980,982,981],"class_list":["post-449201","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-economy","category-important-en","category-society","category-reportaje","tag-bankrupt","tag-government","tag-important","tag-insolvency","tag-moldova","tag-railway","tag-state-owned","tag-trains"],"content_social_share":"Reading Time: <\/span> 4<\/span> minutes<\/span><\/span>

“A journey to the past”<\/em> – this is how Moldovan trains are called. They are old, cold, very slow, but also extremely cheap. Trains and railway stations are like museum exhibits. A lot of them are not decommissioned due to the lack of an alternative. Still, anyone born in the 90’s or earlier has some childhood memories related to this means of transportation.<\/p>\n

\"\"

Inside a Soviet train\u00a0 Source: train-photo.ru<\/p><\/div>\n

SOE “Calea Ferata a Moldovei”<\/strong> (tr. as Railway of Moldova) is the only railway operator in the country (both passenger and cargo transportation). The company’s management announced, at the beginning of February, their intention to interrupt the service of all local and suburban trains starting February 12 in order to cut down operating expenses, as well as sell old metal equipment and some fixed assets to raise money and pay outstanding wages, as being mentioned<\/a> in the recovery plan approved by the Board of Directors, which was presented in front of all Members of Parliament (MPs).<\/p>\n

“We noticed that these shipments only bring losses, no one subsidises them, no one finances them. Moreover, these suburban trains are outdated and dangerous to passengers. It gets really hot in the summer and no one can guarantee that there will be no fires on these trains,”<\/em> said acting General Manager of the state-owned enterprise (SOE), Adrian Onceanu<\/strong>. Later on, the SOE administration denied that such measures would have to be implemented, claiming that this was just a proposed option.<\/p>\n

The root causes<\/h3>\n

Current financial problems of SOE “Calea Ferata a Moldovei” (CFM) are actually more than a decade old. Already in 2019, there were premises for bankruptcy of the company. The corporate financial reports<\/a> for 2019 displayed a net loss of 26.5 million lei<\/strong> (more than 73 million lei in 2018) and a total debt of 464 million lei<\/strong> (569 million lei in 2018). About 33 million lei were recorded as unpaid wages, which represented 14% of company’s current liabilities<\/span>. At the end of 2020, the total debt of the SOE amounted to 459.4 million lei<\/strong>.<\/p>\n

According to the company data, 70% of commuter train passengers are railway workers who travel for free.<\/p><\/blockquote>\n

In December 2020, the railway workers started protests because they had not been paid for several months. As the chairman of the railway workers’ union told<\/a> NewsMaker, almost 7000 employees didn’t received their salaries since September 2020<\/span>, the total amount of the debt amounting to at least 60 million lei. The state-owned enterprise has a shortage of funds because of the debt to the state budget (23.5 million lei as unpaid taxes for October and November 2020), the coronavirus pandemic consequences, as well as high cargo transportation costs for international routes that have to make big detours in conflict zones (Ukraine, for example).<\/p>\n

Last spring, CFM stopped its international passenger traffic due to the pandemic and cancelled some of the most important domestic passengers routes. Only a few routes to the north and east of the country remained. That cut down from the company’s revenue even more.<\/p>\n

At the end of 2019, SOE “Calea Ferata a Moldovei” had 7099 employees. Nowadays, the company has around 6000 employees.<\/p><\/blockquote>\n

What’s more, the company employees have been experiencing periods of not receiving their wages for 6 years in a row. That is beside the fact that their wages are among the lowest in the country. The company data<\/a> for 2016 (the most recent available) showed that the average salary for a transportation worker was almost 4000 lei (190 euros, according tot the current exchange rate).<\/p>\n

No Government help for a state-owned company<\/h3>\n

CFM asked the Government for help with paying salaries, especially during the pandemic period, when a part of the SOE activity was closed down. As the representatives of the railway workers’ union claimed, there were nothing more but promises.<\/p>\n

On the contrary, the state tax service institution has blocked some accounts of CFM in order to partially cover the company’s debt to the state budget.<\/p>\n

A parliamentary commission was formed for investigating the situation at the Moldovan railway company. The commission is supposed to submit a final report at the beginning of April. Not all MPs were convinced of the commission’s usefulness though, claiming that\u00a0bankrupting the SOE and selling it for nothing is what actually is intended<\/span>. Also, the SOE management made accusations, stating that certain political forces used accounting figures for manipulating and aggravating the situation even further.<\/p>\n

Media coverage, employees’ protests, as well as the debates in Parliament have stimulated creditors to claim the outstanding amounts, asking the court to block the accounts of CFM.<\/p>\n

While trying to contain the panic, the company management made several statements, saying that, despite the difficulties, CFM is following an established comprehensive program of reorganization and modernization of the railway infrastructure financed by European partners. According to them, the implementation of the plan began to deliver results: purchase of new locomotives, rehabilitation of infrastructure and purchase of automated equipment. “We rely on your understanding and we assure you that if no artificial obstacles are created, CFM will return to the development path,”<\/em> said, Vitalie Mucan<\/strong>, Deputy Director for Strategic Planning.<\/p>\n

Economist of the Expert-Grup Analytical Center, Stanislav Madan,<\/strong>\u00a0believes<\/a> that all political parties that ever controlled this strategic enterprise tried to gain material benefits. “The only difference is that, before, there were more resources and higher workloads. Now, they have all declined. Therefore, the thefts are more visible.”<\/em><\/p>\n

Photo: unknown<\/p>\n

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