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ECONOMICS > Foreign companies show interest in local railways

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Large foreign railway companies are preparing to invest in local railway sector, which is expected to be liberalized soon. Hürriyet photo

Large foreign railway companies are preparing to invest in local railway sector, which is expected to be liberalized soon. Hürriyet photo

Foreign and local railway companies active in railcar locomotive construction and transportation are preparing to enter Turkey’s promising market as the government plans to lift the state monopoly of the industry. The government is working on a draft law to liberalize the railway sector by the end of the year.

“[The Turkish railway sector] will reach unimaginable levels with liberalization. More than $150 billion in investments will be made [in the sector] by the 100th anniversary of the foundation of the Republic [of Turkey] from both public and private companies. Passenger transportation will develop further, as well as freight, forming a large market where the private sector will be active after the law is enacted,” Railway Transport Association President İbrahim Öz told daily Dünya.

Large European companies such as Deutsche Bahn, Schenker Arkas and Rail Cargo plan to offer railway transportation in Turkey with their own locomotives and railcars, he said, adding that The Greenbrier Companies, an American firm, has expressed the ambition to manufacture railcars. The company delivered a presentation to the association disclosing its plans to establish a factory in Turkey to manufacture 1,000 railcars a year.

Domestic companies

Many domestic companies are also poised to begin manufacturing railcars following liberalization in the railway sector, Öz said. These particularly include sub-contractors that currently perform various manufacturing operations at the factories of the Turkish State Railways (TCDD) and have gained enough experience to begin manufacturing railcars.

“[Turkey] needs a minimum of 5,000 railcars produced per year to close the railcar gap. We as an association have encouraged more of our members [to enter railcar production], and railcar costs have dropped to 55,000 euros from 70,000 euros. Hopefully the figures will drop further as competition increases, and no company will have to purchase railcars from abroad,” Öz said.

The government plans to grant railway operation rights to organized industrial zones. These zones will be able to import and export goods via railway by establishing joint companies, said TCDD General Manager Süleyman Karaman.

The Turkish logistics firm Saras plans to purchase 200 railcars initially, its chief executive, Tamer Dinçşahin, said, adding that the goal is to increase the figure to 500 shortly. Another goal for the company is to invest in locomotives. Firms that want to enter railway transportation should invest in at least 150 to 200 railcars, Dinçşahin said.

Railcar orders have increased significantly this year compared with previous years, officials from Tülomsaş, a subsidiary of TCDD that produces railcars and locomotives, said. The company is accepting orders for next year, as their order capacity for this year is full. The current average 1.25 million-euro price tag for locomotives may decrease, because private companies will be allowed to produce and sell locomotives in the country under the new law.

August/10/2012

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