Railway Reform: Toolkit for Improving Rail Sector Performance - ppiaf

Railway Reform: Toolkit for Improving Rail Sector Performance
5. Creating the Industry Structure
5.4 The Third Building Block: Separability
How the railway industry structure is divided, referred to as ‘separability’, comprises two
primary dimensions, horizontal and vertical. Horizontal separations are sometimes justified
by creating better-managed, decentralized, and market-focused units from a monolithic
national company. Vertical separation into companies for operations and for infrastructure
can help expand private sector participation and competition in train services.
5.4.1 Horizontal separability
The archetypal railway is managed at the national level; usually, larger countries
also have regional administrative units of the national railway.
Horizontal separation works best when there are clearly separable business units
with discrete geographic focus. For example, larger countries have multiple railway
markets—heavy-haul freight in a mining region, major urban centers, and
regional networks—each can be owned, managed and financed separately, compete
over different routes, perhaps with access to tracks in other regions. Specialist
businesses, such as a container rail company, may need to be vertically separated
from infrastructure in order to be independently constituted.
Horizontal separation can sharpen market focus and management accountability,
and allow for specialized operations to be devolved, divested, or compete with
one another. All of these objectives can be met while maintaining the integrity of
a coherent general-purpose national railway system providing long-distance services.
Box 5.3 summarizes horizontal separability.
The World Bank Page 76