Railway Reform: Toolkit for Improving Rail Sector Performance - ppiaf

Railway Reform: Toolkit for Improving Rail Sector Performance
7. Administering the Railways
‘Board of Supervisors’ or ‘Supervisory Board’ and their responsibilities include
collecting inputs from all government entities involved in transport policy (e.g.,
the Ministries of Transport, Finance, and Environment). The unit designated to
execute state ownership could be created in a specific ministry department or
directorate—often the ministry responsible for state-owned companies—or an
autonomous agency, or other entity. State ownership functions should be strictly
separated from regulatory functions in the railway sector 69 .
The state as owner acts through the ownership entity such as the Board of Supervisors,
discussed above, in a manner similar to any major shareholder to protect
and optimize its ownership interests. As defined by the OECD Principles of Corporate
Governance, basic shareholder rights include: (i) to participate and vote
in shareholder meetings; (ii) to obtain adequate information on the corporation
on a timely and regular basis; (iii) to elect and remove members of the board; and
(iv) to approve extraordinary transactions.
The ownership entity
should have skilled
staffed professionals
with legal, financial,
economic and management
expertise that
are experienced in carrying
out fiduciary responsibilities.
Staffing the ownership unit
The ownership entity needs professionals skilled in law, finance, economics, and
business management. They need experience in strategic thinking and carrying
out fiduciary responsibilities, and must have good overall understanding of entrepreneurship
and their roles and responsibilities as civil servants with respect
to state-owned railways. Detailed knowledge of railway operations is not required
in this unit.
The ownership entity should include competencies related to railways’ public
services obligations, specifically expertise in managing contractual relationships
for public service contracts (PSCs), and multi-annual maintenance and operation
contracts for railway infrastructure.
Finally, the ownership entity requires a degree of budgetary autonomy. It must be
able to contract for external advice from independent specialists, to carry out
evaluations or monitor railways results in specific domains, and it must have sufficient
flexibility in staff recruitment, remuneration, and retention, including
from the private sector.
Ownership unit staff responsibilities related to government and
parliament
The ownership unit experts fulfill the following obligations on behalf of the owner
of the railways.
• Elaborate and define ownership policy, owner objectives, and long-term state
commitments
• Conduct consultations on policy issues with the public, ministries, agencies,
the railway board of directors, and parliament
69 This refers to the need of appointing different state entities to address ownership and
regulation issues. The issue of independence of regulatory agency from the government
is much more complex. It could be fully implemented in technical and safety questions,
but economic regulators are easily subject to political interference. The only way to
break this link is through enhanced market competition.
The World Bank Page 114