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Polish Railway Construction Awaits Revival with EU Funds and New Tenders

INFRASTRUCTUREPolish Railway Construction Awaits Revival with EU Funds and New Tenders

Railway construction companies are in a financial slump after a two-year period of almost no new contracts. “This year will certainly be better than 2022-2023. We are counting on the unlocking of EU funds, the approval of all these programs, and the agreement of the National Railway Program to allow the rapid signing of new contracts by the Polish Railway Lines, which the market is eagerly awaiting,” says Maciej Gładyga from the Economic Chamber of Land Transport. He emphasizes that in addition to new orders, the industry also needs stable, flexible financing mechanisms that will make it undependent on EU funds, as at present, firms implementing infrastructure projects on the railways operate from one EU financial perspective to the next.

“The situation of railway contracting companies, as well as linked sectors, primarily the industry producing for railway construction, is very difficult at the moment. Of course, it varies depending on the size of the company and its diversification, because we have companies that work not only on railways, but also in various other sectors, and they are in a somewhat better condition. The ones that are specialized in railway investments, in contracting, as well as in producing products for the railways, such as switches or sleepers, are after more than two years of severe drought in the market. In this time, there were very few orders, so they are in a difficult situation and we will have to try hard to restore this sector to a condition that will allow us to carry out further investments, ” says Maciej Gładyga, Managing Director of the Land Transport Economic Chamber.

The difficulties of companies that carry out rail infrastructure investments have been ongoing for two years. The reason for this are delays in the allocation of EU funds (caused by a dispute of the previously ruling United Right with the European Commission) because Poland’s railway investments are highly dependent on EU funds. Their lack caused PKP PLK, the main procurer in the railway sector, could not announce new tenders, and the companies implementing railway infrastructure investments found themselves in a financial hole. In the relatively worst situation were the manufacturers of materials and products for railway infrastructure.

“This year in the railways will certainly be better than 2022-2023. We are counting on the unlocking of EU funds, the approval of all these programs, and the agreement of the National Railway Program to allow the rapid signing of new contracts by the Polish Railway Lines, which the market is eagerly waiting for ,” says the Managing Director of the Land Transport Economic Chamber. “We hope that the Ministry of Infrastructure will reach an agreement with the Ministry of Finance on securing stable and flexible financing for rail investments so that new contracts can be signed immediately after the end of all tender procedures. We also hope that our proposals for the development of the Railway Fund will be heard in the Ministry and we will be able to start implementing new investments as soon as possible.

The opportunity to mitigate the negative effects of the gap in railway investments is the inflow of money from the KPO (National Recovery Plan). Companies are waiting for them impatiently – especially since the “green, smart mobility” component accounts for 21 percent of the entire KPO budget and is its second-largest component (after the “green economy and reducing energy consumption”). However, for the last two years, the payment of these funds was blocked by the dispute of the previous government with the European Commission regarding the rule of law. The new, coalition government has reached an agreement with Brussels, which at the end of February this year decided to unblock approximately 137 billion euros from the National Recovery Plan and funds from cohesion policy for Poland.

The problem now, however, is that the time to spend part of these funds runs out in 2026. Companies are also afraid of the accumulation of new orders and that the industry, stirred up by the last two years, will have a difficult task to carry out all these investments.

“We are counting on these problems to be resolved quickly. At the moment we are in a period of suspension. It is clear that there have been changes in the ministry, new people will soon appear in the management boards of railway companies, especially in the Polish Railway Lines. During meetings at the ministry, the industry is open to cooperation. We hope that this dialogue with the industry will be continued. We hope that with the new dynamics, all problems will be resolved in the near future,” says Maciej Gładyga.

The railway construction sector has long been calling for the introduction of stable financing mechanisms for railway investments. Currently, this area is heavily dependent on the inflow of EU funds, so any delay or shift of EU funds causes market disturbances related to either the lack or accumulation of projects at one time. However, companies that implement railway infrastructure investments operate from one EU financial perspective to the next. That is why the industry insists on the need to become more independent of EU funds and work out other mechanisms for financing such projects, which will, inter alia, eliminate idle times in deciding tenders and signing contracts in the periods between subsequent “seven-years” and enable companies to predictability and stable development.

“The industry mainly needs stable, flexible and certain financing. We have been talking about this for a long time and last year, at the end of April, we submitted to the Ministry of Infrastructure a draft changes to the railway fund act, which would solve some of these problems. It assumed, among other things, an increase in the share of railways in the revenues from the fuel charge, it also ensured more flexible financing. Last month we re-submitted this act to the new minister, as well as to the Ministry of Finance. We hope that this time the work will start quickly. We have already had our first conversation with Minister Piotr Malepszak and we see a very positive attitude towards the issue of financing railway investments. Stable financing and launching of new investments are our main needs at the moment,” emphasizes the Managing Director of the Land Transport Economic Chamber.

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