The World from Berlin: Will Deutsche Bahn's Privatization Be Derailed?

DPA

State governments fear lucrative high-speed and long distance lines, such as the ICE (seen here on the right), will get more attention than local trains (in background).

Under the plan, approved last week by Chancellor Angela Merkel's cabinet, up to 49 percent of Bahn's shares could be sold to private investors. The government is also considering floating up to 25 percent of the company's shares in an initial public offering. It would be the last major sell-off of a government-owned company in Germany, following Deutsche Post and Deutsche Telekom, Europe's biggest mail and telecommunications companies.

But the plan has angered transportation ministers in a number of Germany's 16 federal states. Though the government would technically retain legal ownership of the national railway's track network, it would hand 34,000 kilometers (21,000 miles) of tracks along with stations over to Deutsche Bahn as a concession for up to 15 years. A government regulator would ensure fair competition. But there are also legal questions about the plan, since Germany's constitution requires the state to provide comprehensive rail services and also to be responsible for maintenance of tracks.

The states fear that the deal, drafted by German Transportation Minister Wolfgang Tiefensee, would give Deutsche Bahn too much power over tracks and could lead to neglect of rails and reduced -- or even eliminated -- services in rural or less populated areas. The states are concerned they will lose influence over how taxpayer money is spent on the track network -- and they fear Deutsche Bahn might pump a disproportionate amount of the €2.5 billion a year it gets from the government for track upkeep into lucrative long-distance routes than smaller regional lines. The states are threatening to block the legislation later this year in the Bundesrat, the upper chamber of parliament that is controlled by the states.

Commentators writing in Germany's newspapers Friday feel that the states' fears are justified.

The center-left Süddeutsche Zeitung writes:

"In some German states a very public resistance to the privatization project has sprung up -- mainly out of concern that the future co-owners of Deutsche Bahn may care more about (long-distance) intercity trains or commercial transport than about good provincial service. The states may also be afraid that money won't flow to places where it will help the most, but to where it will yield the best return. State governors are demanding quite a bit more say in the Bahn's operation, as well as more time to discuss the proposed new (privatization) law."

"That may sound like a few changes to details, but it could spell the end of this proposed law. Every change in the draft could bring the proposal into more conflict with either the German constitution or with federal accounting standards."

Conservative Frankfurter Allgemeine Zeitung writes:

"Tiefensee did not succeed in separating the railway tracks from transport. Instead the track network will become a concession operated by Deutsche Bahn for 15 years. The question still remains whether less-fruitful investments in the track network will be stopped. Remote rural regions, especially, could suffer. And the people who would suffer the most are the national railway's customers. Even the condition foreseen in the draft that the railway track network would go back into the government's hands after 15 years if parliament doesn't move to extend the concession is a foolish act. Under current terms Finance Minister Peer Steinbrück would have to pay €8 billion in compensation to Deutsche Bahn if the concession ended. There's a danger that the government will abandon the track network in the long term because buying it back would become too expensive."

The left-wing Die Tagesszeitung writes:

"Germany's federal states already have more power in this issue than the discussion might suggest. They can decide whether the cities and villages in their regions are served by Deutsche Bahn AG trains or by those of their competitors. They can increase competition and reduce costs by putting contracts out to tender. But contracts for large areas are still being awarded -- frequently to Deutsche Bahn -- without being put out to tender. ... There must be a level playing field if there is to be fair competition. ... The track network must remain in the hands of the federal government, otherwise there is the danger of developments similar to those which have been seen in the energy industry. There the former monopolists hinder competition by charging inflated fees for the use of their networks."

Business daily Financial Times Deutschland writes:

"Opponents of the partial privatization as currently envisioned are demanding the full separation, in terms of business operations, of the railway network from train services. At the very least, they want the maximum political influence possible over the railway lines. And they're correct, too, because if Deutsche Bahn has control over the track network, then the company would also have decisive influence over competition. The company may dispute this, but Deutsche Bahn has considerable leverage to weaken competitors with its monopoly on the tracks. Bahn competitors have to pay the company a service fee to use its tracks. Bahn could raise usage prices on routes to the point that they would become unattractive to competitors. It still remains to be seen whether the federal regulatory agency that will be created to monitor the railway network will be able to prevent Deutsche Bahn from engaging in anti-competitive practices."

"The poor formulations in this bill have to be fixed before the partial privatization. The best solution would be to allot the concession for operating the track network to a different company under the effective oversight of the competition watchdog agency."

Conservative Die Welt writes:

"The fears on the part of the federal states that they will lose influence in a partly privatized Deutsche Bahn are well founded. It would be naïve to think that a stock market flotation will simply unleash a flow of money into the coffers while everything continues to operate as before. Investors who get on board want to see returns and will pay close attention to those routes which make money. But the horror scenarios being talked about of a privatized Deutsche Bahn closing down rail lines en masse are exaggerated."

"In the future, authorities will still supervise the construction and dismantling of rail lines. Nevertheless, under the influence of private investors, Deutsche Bahn will be tempted to use its investment funds where the yields will be greatest -- high-volume lines and its profitable logistics service. In light of that, regional rail lines will not benefit from the flotation."

-- Daryl Lindsey, 2 p.m., CET