Functional Review Transport Sector
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Beneficiary: The General Secretariat of the Government Project title: Functional Review of the Central Public Administration in Romania - I Functional Review of the Transport Sector SMIS Code: 19881 Co-financed by the European Social Fund, through the Operational Program Development Administrative Capacity, during the period July 5th, 2010 - July 4th, 2011 The World Bank Europe and Central Asia Region Abbreviations and Acronyms AACR Autoritatea Aeronautica Civila Romana (Romanian civil aviation authority) AFER Autoritatea Feroviara Romana (Romanian railway authority) ANR Autoritatea Navala Romana (Romanian naval authority) ARR Autoritatea Rutiera Romana (Romanian road authority) BOT Build, Operate, Transfer BSC Balanced Score Card CEO Chief Executive Officer CESTRIN RNCMNR‘s Central Laboratory for Transport and Road Infrastructure CFR SA Societatea Naţională de Căi Ferata (railway infrastructure company) CFR Marfă Societatea Naţională de Transport Feroviar de Marfă (railway freight company) CFR Călători Societatea Naţională de Transport Feroviar de Călători (railway passenger company) DMU Diesel multiple unit (train set) DRDP RNCMNR‘s regional office EBRD European Bank for Reconstruction and Development ECA Europe and Central Asia region EIB European Investment Bank EU European Union EUR Euro currency unit EMU Electric Multiple Unit (train set) FR Functional Review GDP Gross Domestic Product GoR Government of Romania HQ Headquarters HRM Human Resources Management IFC International Finance Corporation IFI International Financial Institution IPMC Internal Project Management Consultant km (s) Kilometers km/h Kilometers per hour MOT Ministry of Transport and Infrastructure MPF Ministry of Public Finance OECD Organization for Economic Co-operation and Development OPRC Output and Performance-based Road Contract PA Performance Agreement pax-km A unit equivalent to the movement of one passenger by one kilometer PBMC Performance-Based Maintenance Contract PMMR Performance-based Management and Maintenance of Roads PSC Passenger Service Contract PPP Public private partnership PSP Private sector participation (whether through license, lease, permit, contract, agreement, joint venture, concession, PPP structure or other framework) RA Road Administration RAR Registrul Auto Roman (Romanian automobile registry) RON Romanian New Lei RNCMNR Romania National Company for Motorways and National Roads route-km Kilometers of commercially operated railway route in network RRC Regional railway company SOE State-owned enterprise SOPT Sector Operational Program for Transport tonne Metric ton of 1,000 kilograms tonne-km A unit equivalent to the movement of one tonne of freight by one kilometer track-km Kilometers of railway track in the network (including duplicate and technical tracks) train-km A unit equivalent to the movement of one train by one kilometer Table of Content Acknowledgement .......................................................................................................................... 1 Executive Summary ......................................................................................................................... i Summary of Findings and Action Plan .......................................................................................... iv 1 Introduction ............................................................................................................................. 1 1.1 Objectives of the Review ................................................................................................. 1 1.2 Background ...................................................................................................................... 1 1.3 Method of Approach ........................................................................................................ 2 2 Sector Governance .................................................................................................................. 3 2.1 Main Roles of Government in Transport ......................................................................... 3 2.2 Strategy and Policy........................................................................................................... 3 2.3 Transport Industry Structure ............................................................................................ 4 2.4 Purchase of Transport Services ........................................................................................ 6 2.5 Sector Regulation ............................................................................................................. 7 2.6 Administrative Apparatus: Organizing the MOT............................................................. 9 2.7 Summary of Recommendations on Sector Governance ................................................. 11 3 Corporate Governance .......................................................................................................... 13 3.1 Introduction .................................................................................................................... 13 3.2 Board Composition ........................................................................................................ 14 3.3 Shareholdings and Reserved Shareholder Rights........................................................... 15 3.4 Selection of CEO and Chairperson of the Board ........................................................... 15 3.5 Business or Corporate Plan ............................................................................................ 15 3.6 Transparency and Disclosure of Information ................................................................. 15 3.7 Subsidiary Companies .................................................................................................... 16 3.8 Summary of Recommendations on Corporate Governance ........................................... 17 4 Corporate Management and Processes ................................................................................. 18 4.1 CFR Marfă...................................................................................................................... 18 4.2 CFR Călători .................................................................................................................. 19 4.3 CFR SA .......................................................................................................................... 21 4.4 RNCMNR....................................................................................................................... 22 4.5 Other Entities.................................................................................................................. 27 5 Sector Funding and Budgeting.............................................................................................. 29 5.1 Overview ........................................................................................................................ 29 5.2 Public Investment Management ..................................................................................... 29 5.3 Budget Formulation and Execution................................................................................ 31 6 Private Sector Participation................................................................................................... 33 Annex 1: Transport Strategy ......................................................................................................... 36 Annex 2: Alternative model for the reorganization of the Ministry of Transport ........................ 38 Annex 3: Concept of a regional rail PSC concession ................................................................... 45 Annex 4: Concept of a branch line bus PSC contract ................................................................... 47 Annex 5: Review of Corporate Governance against OECD Guidelines ...................................... 48 A. Introduction .................................................................................................................... 48 B. Ensuring an Effective Legal and Regulatory Framework .............................................. 49 C. The State Acting as an Owner ........................................................................................ 51 D. Equitable Treatment of Shareholders ............................................................................. 54 E. Relations with Stakeholders ........................................................................................... 54 F. Transparency and Disclosure ............................................................................................. 56 G. The Responsibility of the Board..................................................................................... 58 H. References and Selected Bibliography ........................................................................... 61 Annex 6: Road Sector Administrative Framework and Proposed Organization of RNCMNR ... 62 A. The Administrative Framework Governing Romania‘s National Roads ....................... 62 B. Options for RNCMNR‘s Organization .......................................................................... 69 C. Proposed Division of responsibility between the road sector entities (Cooperative framework matrix) .................................................................................................................... 76 D. Proposed Road Sector Budget Structure ........................................................................ 82 Annex