Business News
German government hopes rail privatization to go ahead this year
By DPA
Apr 29, 2008, 9:42 GMT

Berlin - The German government intends to proceed with the part-privatization of the national rail company, Deutsche Bahn (DB), by the end of the year, Transport Minister Wolfgang Tiefensee said Tuesday.

Tiefensee was speaking after coalition party heads agreed Monday on selling off a quarter of the passenger and freight services, while retaining the rail network, stations, power generation and signalling in state hands.

'We hope that we can manage it in 2008,' Tiefensee told national public radio Deutschlandfunk.

Alluding to the current financial turbulence, the transport minister said that if the market was not right, 'one could perhaps wait two or three months.'

Estimates on the value of the 24.9-per-cent stake in passenger and freight services run to around 6 billion euros (9.5 billion dollars).

Chancellor Angela Merkel's cabinet is to discuss the details of the decision at their routine meeting on Wednesday.

The issue provoked months of debate within the broad coalition government, comprising Merkel's conservative Christian CDU/CSU bloc and its traditional rival, the Social Democrats (SPD).

The SPD conceded ground in the debate, backing away from a proposal to sell the DB stake as a 'people's share.' Instead, the offering is expected to go to big institutions.

The SPD sees the deal as the end of the privatization process, while the CDU/CSU aims to double the stake sold off to 49.9 per cent, but still intends to retain the 34,000-kilometre track network in state hands.

Following the meeting of the heads of the parties late Monday, SPD Chairman Kurt Beck said the 'lion's share' of the proceeds should go to modernizing the rail network, with up to a third going into the state coffers.

DB has reached a pre-privatization accord with unions ruling out layoffs for the next 15 years.

DB showed profits last year up 2.1 per cent at 1.72 billion euros. The company forecast a rise in sales of about 5 per cent in 2008 after saying 2007 sales jumped by 4.2 per cent to 31.3 billion euros.