Overcompensation vs. opening of the rail market. Expert: It’s a challenge for all of Europe
Poland is preparing for the liberalization of the rail passenger transport market. This change is expected to increase competition among operators and improve service quality, but it is associated with the need to organize the rules of public transport financing. One of the most important topics is accounting for compensation and overcompensation in public service contracts (PSCs).
– Compensation is the difference between the cost of providing public services and the operator’s revenue, plus a reasonable profit. Under EU law, compensation is also any benefit derived from public funds – including rolling stock or infrastructure, explains Stefan Akira Jarecki, Ph.D., professor at the Warsaw University of Technology.
The problem arises in the case of rolling stock projects co-financed by EU funds. Their life cycle is usually 30-40 years, while PSC contracts are valid for 10-15 years. As a result, the operator may end the contract with an unaccounted-for benefit, leading to the risk of overcompensation.
Experts are considering several solutions. The most common is pointing to rolling stock clauses that specify how the assets will be settled at the end of the contract. Also at stake is the transfer of rolling stock to a new operator, leaving it with the existing carrier with an obligation to make it available, or the use of appropriate mechanisms in tenders that eliminate the advantage of owning rolling stock.
– All EU countries will face the same challenge. Poland can benefit from foreign experience, but also become a source of good practices itself, because we have public transportation developed at a high level,” stresses Prof. Jarecki.
Market liberalization is an opportunity for better railroads, but it requires precise rules to ensure fair competition and protect public funds.
The entire interview can be viewed on our YouTube channel or read at openakolej.cupt.gov.pl.
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