State Aid SA.43127 (2015/NN) (Ex 2015/N) – Poland - Restructuring of the Polish Regional Railways
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EUROPEAN COMMISSION Brussels, 23.1.2018 C(2018) 205 final In the published version of this decision, PUBLIC VERSION some information has been omitted, pursuant to articles 30 and 31 of Council This document is made available for Regulation (EU) 2015/1589 of 13 July 2015 information purposes only. laying down detailed rules for the application of Article 108 of the Treaty on the Functioning of the European Union, concerning non-disclosure of information covered by professional secrecy. The omissions are shown thus […] Subject: State aid SA.43127 (2015/NN) (ex 2015/N) – Poland - Restructuring of the Polish Regional Railways Sir, The Commission wishes to inform Poland that, having examined the information supplied by your authorities on the measure referred to above, it has decided to initiate the procedure laid down in Article 108(2) of the Treaty on the Functioning of the European Union. 1. PROCEDURE (1) On 21 September 2015, Poland notified a restructuring aid for Przewozy Regionalne Sp. z o.o. ("PR") in the amount of PLN 770.3 million (c. EUR 181 million)1. The aid was granted on 30 September 2015 in the form of equity investment by the 100% State-owned Industrial Development Agency ("IDA"). Since the aid was granted without prior authorisation by the Commission, it breached the standstill clause laid down in Article 108(3) of the Treaty on the Functioning of the European Union ("TFEU") and Article 3 of Council 1 EUR 1 = PLN 4.25. Jego Ekscelencja Pan Jacek CZAPUTOWICZ Minister Spraw Zagranicznych Al. J. Ch. Szucha 23 00-580 Warszawa POLSKA Commission européenne/Europese Commissie, 1049 Bruxelles/Brussel, BELGIQUE/BELGIË - Tel. +32 22991111 Regulation (EU) 2015/1589.2 Therefore, the notified measure has been registered as unlawful aid (2015/NN) and the procedural rules applicable are those laid down in Chapter III of that regulation. (2) The Commission requested additional information on (i) 27 November 2015, (ii) 23 November 2016 and (iii) 30 June 2017, to which Poland replied on (i) 16 February 2016, 4 March 2016 and 3 June 2016, (ii) 9 January 2017 and (iii) 28 July 2017. In addition, Poland submitted information on 11 January 2017, 1 February 2017 and 20 June 2017. The Commission held meetings with Poland on 8 April 2016, 26 April 2016, 21 September 2016, 11 January 2017 and 4 July 2017. 2. DESCRIPTION 2.1. Beneficiary (3) PR is the largest passenger regional rail operator in Poland, with approximately a 27% share in the Polish market in terms of the number of passengers carried and 50% in terms of traffic volume in train/km. Based in Warsaw, PR operates in 15 out of Polish 16 regions (voivodships) and is the sole provider of public passenger regional rail transport in seven voivodships, mostly the least economically developed. (4) PR was previously owned by 16 voivodship self-governments. As a result of granting the restructuring aid, it is currently owned by IDA, which has 50% +1 shares in PR, and by 16 voivodship self-governments. It employs approximately 9,000 people and is classified as a large enterprise. All regions in which PR operates are eligible for regional aid under Article 107(3)(a) TFEU. (5) PR's core activity is the provision of public passenger transport services at the regional level under public service contracts concluded with voivodship self- governments and financed in the form of public service compensation. In addition, on a much smaller scale, PR provides international and "trans-border" transport services and rents and repairs rolling stock. In the past PR also provided commercial inter-regional transport services but ceased operating them in September 2015. 2.2. Competition and legal context (6) PR's competitors include eight "internal" (so called "in-house") operators3, operating essentially within a single voivodship and owned by that voivodship's authorities (self-governments), as well as one "external" operator, Arriva RP, a subsidiary of Deutsche Bahn. The competitors of PR operate on selected routes, usually concentrated around larger cities. As a result, even in the regions where there is more than one operator, PR often has a significant share in the market. 2 Council Regulation (EU) 2015/1589 of 13 July 2015 laying down detailed rules for the application of Article 108 of the Treaty on the Functioning of the European Union, OJ L 248 of 24.9.2015. 3 Koleje Mazowieckie, Warszawska Kolej Dojazdowa, PKP Szybka Kolej Miejska, Koleje Śląskie, Koleje Wielkopolskie, Koleje Dolnośląskie, Łódzka Kolej Aglomeracyjna, Koleje Małopolskie. 2 (7) Under Polish law public rail transport at regional level is organised by voivodships and is provided on the basis of a public service contract concluded between the organiser of such transport (voivodship self-government) and the operator. The organiser can procure transport services either by way of direct award or through a competitive tender. In practice the former has been most frequently used. In the 2016/2017 timetable, c. […]*% of traffic volume is carried out under directly awarded contracts. (8) According to Poland, where a competitive tender was organised in the past, PR was often the only bidder. This is because the other operators considered the routes under tender as not economically attractive or, in case of the "in-house" operators, were not interested in bidding outside "their" voivodships. Apart from Arriva, no other external operator, domestic or foreign, has ever expressed interest in entering the Polish regional rail market. (9) While some rail transport sectors (e.g. freight, international passenger) have already been liberalised at the EU level, the domestic passenger market can still be closed to competition. Under the fourth railway package4 public service contracts for public passenger transport services by rail can be directly awarded until December 2023, for a maximum duration of 10 years, i.e. until December 2033. Some Member States have already opened (part of) their markets for competition on the basis of their national law. In Poland the contracts awarded by way of a competitive tender account for c. […]% of total traffic volume scheduled in the 2016/2017 timetable. 2.3. Origins of PR's financial difficulties (10) PR began operations in October 2001 as a result of the structural reform of the railway sector. The reform was implemented mainly on the basis of the Law of 8 September 2000 on commercialisation, restructuring and privatization of the State Enterprise Polish State Railways5 ("PKP Law"). The PKP Law transformed the former State Enterprise Polish State Railways into a joint stock company, wholly-owned by the State Treasury through PKP S.A. PKP S.A., a parent company of the newly-created PKP Group, subsequently established operating subsidiaries, including the infrastructure manager (PKP PLK) and operators * Business secret. 4 The fourth railway package is a set of six legislative text adopted in 2016 designed to complete the single market for rail services, comprising Regulation (EU) 2016/796 of the European Parliament and of the Council of 11 May 2016 on the European Union Agency for Railways and repealing Regulation (EC) No 881/2004 (OJ L 138, 26.5.2016), Directive (EU) 2016/797 of the European Parliament and of the Council of 11 May 2016 on the interoperability of the rail system within the European Union (OJ L 138, 26.5.2016), Directive (EU) 2016/798 of the European Parliament and of the Council of 11 May 2016 on railway safety (OJ L 138, 26.5.2016), Regulation (EU) 2016/2338 of the European Parliament and of the Council of 14 December 2016 amending Regulation (EC) No 1370/2007 concerning the opening of the market for domestic passenger transport services by rail (OJ L 354, 23.12.2016), Directive (EU) 2016/2370 of the European Parliament and of the Council of 14 December 2016 amending Directive 2012/34/EU as regards the opening of the market for domestic passenger transport services by rail and the governance of the railway infrastructure (OJ L 352, 23.12.2016), Regulation (EU) 2016/2337 of the European Parliament and of the Council of 14 December 2016 repealing Regulation (EEC) No 1192/69 of the Council on common rules for the normalisation of the accounts of railway undertakings (OJ L 354, 23.12.2016). 5 Official Journal of Laws of 2000, number 84, position 984 with amendments. 3 responsible for the provision of freight and passenger transport services. Among the latter was PKP PR, a subsidiary dedicated to the provision of public regional and inter-regional rail transport services. In 2008, PKP PR was acquired by the voivodships, whereupon it changed its name to PR (further references to PR mean also its legal predecessor, PKP PR). (11) Article 79(1) of the PKP Law provided that the financial resources should be included in the State budget for the provision of regional and inter-regional passenger rail services in the total amount of PLN 2,400 million for the years 2001-2004. At least 10% of this amount should be earmarked for the acquisition of rail vehicles necessary to provide these services. Due to the lack of sufficient budget resources this amount was subsequently reduced to PLN 900 million, of which PR actually received only PLN 532 million. (12) In addition, on the basis of the Law of 20 June 1992 on entitlements to reduced tariffs for carriage by public transport means6, PR was entitled to receive compensation from the State budget for the loss of revenue caused by the application of the statutory reduced tariffs.7 PR actually received only part of this compensation due for years 2002 and 20038, i.e. PLN 375.5 million instead of PLN 618.4 million, leading to the outstanding balance of PLN 242.9 million.