Business News

Conference Wooing Support for Logistics Holding

Brdo pri Kranju, 13 September (STA) - Former Deutsche Bahn boss Hartmut Mehdorn, who acts as adviser for the Slovenian government, presented on Monday his proposal for a logistics holding that would tie up Slovenia's three biggest state-owned logistics companies: port operator Luka Koper, rail operator Slovenske zeleznice and logistics company Intereuropa.

Addressing a conference at Brdo pri Kranju, Mehdorn underlined that the Slovenian Logistics Holding would strengthen the competitive positions of Slovenske zeleznice and Luka Koper, while Intereuropa would benefit from efficient transport links.

It became clear in the past months that Slovenske zeleznice will not get the money it needs, while Luka Koper is facing an ever more demanding competition and Intereuropa's debt needs restructuring, Mehdorn said.

He pointed to three possible scenarios: not doing anything, restructuring the rail operator first and the other two companies later, or tackle all three together.

Ignoring the problem would cost Slovenia its good strategic position and cause financial losses, restructuring the rail operator first would cost EUR 250m but yield no results, thus Mehdorn believes restructuring and tying up the three companies would be the best option.

He believes that the three companies are too small to face competition individually, but together they could make a more cost-efficient logistics holding that would generate between EUR 800m and EUR 900m in turnover.

Before the holding can be created, there is the need to restructure Slovenske zeleznice, secure extra liquidity for Intereuropa and improve the performance of Luka Koper. The government would then need to approve the establishment of an integrated company, Mehdorn said.

His proposal is that all three companies would be 100%-owned by the holding, which in turn would be majority-owned by the state. He said that the government might find an interesting foreign investor in the future, but advised that it kept an at least 51% stake in the holding.

The holding is to be controlled by a board of stakeholders and an supervisory board of experts. It would have an executive board comprised of the CEOs of Slovenske zeleznice, Luka Koper and Intereuropa, while the government would establish a special regulator body to prevent monopoly.

He believes that connecting the Koper port with road and rail transport would bring a number of synergies. Immediately the holding would save the companies some EUR 20m and EUR 40m later on. What is more, there would be no overlapping of investments, which would save around EUR 50m.

Prime Minister Borut Pahor, who opened the conference, said that the only aim behind the idea of a holding was not to rehabilitate the troubled Slovenske zeleznice. "It (the idea) arose because its creators had a broader picture in mind, Slovenia's entire logistics sector...."

"This is a decision too important to be made in haste - but we don't want to delay it either," Pahor said.

Transport Minister Patrick Vlacic noted that the interests of the three individual companies were indeed different, but he believes that the Koper port cannot reach its potential without modern rail infrastructure.

Currently the port transships some 16 million tonnes of cargo annually and is aiming for 40 million tonnes. "I can't imagine that these capacities could be transported on motorways."

Vlacic stressed that Slovenske zeleznice must modernise its business model. "Good rail infrastructure, a modern rail transporter and good hauling services are the conditions for success."

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