Tashkent, Uzbekistan (UzDaily.com) -- Experts from the Institute for Macroeconomic and Regional Studies (IMRI) analyzd Germany’s experience in reforming the railway sector.

Until 1994, German railways were managed by two organizations: the Deutsche Bundesbahn in West Germany and the Deutsche Reichsbahn in East Germany.

In 1994, the reform of the railway sector began, during which free access to the infrastructure was opened for all operators. Suburban transportation was transferred to the local authorities, who received the necessary volumes of subsidies from the government for these purposes.

Two key reasons for reform were cited in the government’s rationale for the 26 March 1993 railway reorganization bill:

1. Low productivity of railways and unavailability of capacities in the face of expected growth in cargo volumes

2. Weak financial stability of the management company against the backdrop of accumulated debts and a decrease in the share in passenger and freight traffic.

In the early 1990s, the Deutsche Bundesbahn lost about 25.5 billion euros, although the German federal government paid about 7 billion euros annually for public service obligations. Moreover, since the mid-1950s, the Deutsche Bundesbahn has lost a significant part of its market share: between 1960 and 1990, it declined from 36% in passenger traffic to 6.1% and from 56% in freight traffic to 20.5%.

The key points of the reforms contained the following:

- Privatization of the Deutsche Bundesbahn and Deutsche Reichsbahn and their merger into Deutsche Bahn AG.

- Separation of infrastructure and operating companies to increase competition in the rail market.

- Attracting private investors to develop infrastructure and create new services.

In 1999, the second stage of the reform began - the five divisions of Deutsche Bahn AG were transformed into separate corporations that were responsible for various activities. They were DB Netz AG (infrastructure), DB Station & Service AG (station and service), DB Dienstleistungen GmbH (communications, maintenance, safety at stations and trains), DB Personenverkehr GmbH (passenger traffic) and Stinnes AG (freight traffic). ).

The reform has resulted in improved service quality and efficiency, as well as reduced transport costs. In particular, for the period from 1994 to 2012. the volume of freight traffic increased by 58%, and the volume of passenger traffic - by 36%. Growth in passenger traffic was mainly due to domestic traffic (+56%), the flow to long-distance trains increased by 7%.

In general, the railway reform in Germany is considered successful and has become an example for other countries that are also implementing reforms in the railway industry.

A distinctive feature of today’s railway regulation is that private operators are involved in the wagon and locomotive components. Only the infrastructure is under the control of the state, which ensures equal access of all market participants to the infrastructure.

However, today the German railway infrastructure is in urgent need of modernization. During the years of state administration, insufficient funds were allocated for the modernization of railway infrastructure facilities. As a result, compared with 1994, the length of the railway network has decreased by about 20%.

Deutsche Bahn and the government are taking a number of steps to address the issues. For example, in March 2023, the German cabinet committed to invest 45 billion euros in the company over four years. The revitalization and modernization of the railway network is now a key element of plans to achieve climate neutrality by 2045.