Last week, Czech media reported the planned abolition of the Czech independent Rail Regulator ÚPDI by the Ministry of Transport. At first glance, the reasons given by the Minister of Transport –“reducing bureaucratic burden” and “saving the state budget” – seem legitimate. However, a deeper examination reveals a concerning possible twist.
According to leading Czech news website Seznam Zprávy, the Czech Minister of Transport allegedly took the decision to abolish ÚPDI after finding out that its President, Mr Pavel Kodym, asked the EU Commission a question about a transaction involving the state incumbent rail operator České dráhy (ČD). This transaction, in which ČD could potentially unfairly profit from renting and selling inherited real estate, would grant ČD an unfair financial advantage in the competitive passenger rail market.
One could ask: could the real reason be that ÚPDI will be abolished is… that it was doing its job properly?
Regulatory bodies, like ÚPDI, are established in every EU Member State to ensure a level playing field for all rail operators. They are entrusted with the mission of being vigilant watchdogs, safeguarding the principles of fair competition and non-discriminatory access to infrastructure.
In the Czech Republic, the railway regulator was established as an independent stand-alone institution, with its President appointed by the Government for 6 years. After serving the previous 6 years, Mr Kodym was successfully reappointed in the mandate renewal selection procedure earlier this year.
Then suddenly, in February 2023, just after finding out that Mr Kodym had asked a question the EU Commission about a transaction involving the sale of inherited rail estate that would solely benefit the incumbent rail operator České dráhy (ČD), the Minister of Transport did a U-turn and announced – via the media – that the ÚPDI would be abolished by the end of 2023, with its functions to be taken over by the Czech National Competition Authority (NCA) – purportedly to save on operating costs.
This decision was taken without warning and without any prior analysis on how much alleged savings it would generate. This was a surprising turn of events considering that the Ministry, a competent authority involved in the award of Public Service Obligation (PSO) contracts, is not permitted to interfere in this procedure, as stated in Article 55 of the EU Directive 2012/34/EU.
Considering that the NCA would now have to perform the same functions as the ÚPDI, at best, costs will remain the same, at worst the NCA will have difficulty learning and carrying out its new tasks. Even the anti-corruption organisations Transparency International, Oživení (Revival) and Rekonstrukce státu (Reconstruction of the State) are sceptical.
Furthermore, by deciding not to reappoint Kodym, the Ministry has deprived ÚPDI of a President, therefore crippling it. Indeed, ÚPDI needs its President to perform its duties as an appeal instance in cases that are submitted to it.
“In its previous term, ÚPDI played a proactive role in ensuring fair conditions for all. Unfortunately, the procedure of the merger of ÚPDI into NCA raises too many questions about the transparency of such an abrupt step. It seems to be a deliberate action rather than a mere coincidence”.
ALLRAIL Secretary General Nick Brooks
We strongly urge the Czech Government and Parliament to carefully reconsider this reckless decision1. Will the rail regulator be abolished for… doing its job properly?! ALLRAIL calls upon the EU Commission to take swift action, implementing the necessary measures in response to this matter.
1 The Czech Parliament is due to vote in a fast-track procedure the new Act that will abolish ÚPDI – which means that there will be no discussion in the Committees. Such procedure should be mainly used for non-controversial Acts.