Germany to give ailing railway company more money

German transport minister Volker Wissing announced an additional sum of €40 billion for its railway network – in part by topping up the state-owned company’s equity, pending approval by the European Commission.

Germany’s state-owned railway company Deutsche Bahn (DB) has grown increasingly unpunctual, with almost a third of all passengers arriving with a delay of 15 minutes or more in 2022.

To address the problem, the government now plans to spend an additional €40 billion on the railway network in the years up to 2027, transport minister Volker Wissing (FDP/Renew) announced on Friday (15 September).

“The rail infrastructure has been neglected for decades and brought to its absolute limits,” Wissing said in a statement. “This is no longer acceptable and unworthy of a modern economy,” he added.

€12.5 billion of this should come as a top-up of the company’s equity, pending approval of the European Commission.

While the state-owned company had asked for a total of €45 billion more to renew its infrastructure, the remaining €5 billion will be “topped up” over the next years, Wissing said.

The package is partly financed by a new top-up to Germany’s road toll for trucks, which will be increased with a CO2-levy of €200 per tonne of CO2 as of December 2023.

Parts of the financial means should also come from Germany’s €212 billion “climate and transition fund”, which is fed by revenue from the EU’s Emissions Trading System (EU ETS) and Germany’s national carbon price on heating and transport fuels.

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Total of 40 routes to be renewed

The CEO of Deutsche Bahn, Richard Lutz, thanked Wissing for the additional funding, and promised to modernise a total of 40 routes in the country.

The investment into the modernisation of railway infrastructure is “unprecedented” in German history, Lutz said.

The first routes to be modernised will be the crucial routes between Hamburg and Berlin, and the connection from Germany’s industrial hub in the Ruhr area to the Dutch border near Nijmegen, work on which will start in 2025.

For the work to happen, the sections will be closed for several months at a time, the company announced.

“The enormous construction workload will also be challenging for passengers and freight transport companies,” Lutz said. “But there is no alternative to tackling the renovation backlog,” he added.

Appraisal by passenger representatives

Representatives of railway customers praised the measures, but warned lawmakers not to deviate money from the CO2 levy on trucks for other means.

“This portion must not be cut,” said Alexander Kaas Elias of German mobility club VCD. The €45 billion is “urgently needed”, he stressed, reminding the government of its own ambitious target of doubling passenger numbers of DB by 2030, as part of its climate agenda.

“If [the government] is serious about giving priority to rail, it must actually provide this sum,” he said.

As of next year, the German government plans to separate the company structure of state-owned company Deutsche Bahn, obliging the infrastructure departments in charge of the railway network and operating stations to work in the name of “public good”, instead of focusing on profitability.

The plans have come under criticism from opposition parties CDU/CSU, which would rather see the whole company broken into two parts: One focusing on infrastructure and one on operation.

The monopolies commission, a pro-market expert council advising the government, also called for a company break-up in order for competition – and quality – to be increased.

Germany should break up ailing national railway company, experts say

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Germany privatised its national railway company in 1994, but the emerging company, Deutsche …

[Edited by Nathalie Weatherald]

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