Business Minister says ruling on late train delivery could lead to ticket price hike

19-11-2015 12:28 | Ian Willoughby

If an appeal against an arbitration ruling under which Czech Railways must pay CZK 1.2 billion to Škoda Transportation proves unsuccessful the price of train tickets in the Czech Republic could go up, the Minister of Transport, Dan Ťok, has warned.

Photo: Jaroslav Charvát, CC BY-SA 3.0Photo: Jaroslav Charvát, CC BY-SA 3.0 Czech Railways had been seeking close to a CZK 1 billion from the engineering company over the late delivery of nearly two dozen of Škoda Transportation’s 380 line locomotives.

However after years of deliberation (the original deal was done in 2004), the court of arbitration attached to the country’s economic and agricultural chambers found in favour of Škoda Transportation in a verdict that one news site said meant that Czech Railways now had the most expensive trains in the world.

Minister Ťok appealed to Czech Railways not to pay the fine. He and the rail operator regard the court’s decision as unsound as it does not recognise penalties for tardy delivery.

Mr. Ťok described the ruling as scandalous and dubbed Škoda Transportation’s approach as immoral. The ANO appointee said the sum was astronomical and could majorly impact Czech Railway’s budget. He said he would raise the matter at a meeting of leaders of the parties in the governing coalition.

The state is being punished for the fact that Škoda Transportation delivered the 20 trains late, expensively and as yet without the permits required for the German rail network, said the minister. He described the situation as the tunnelling of Czech Railways.

Mr. Ťok said Škoda Transportation should receive payment, despite supplying the locomotives five years behind schedule. However, he has disputed a demand that Czech Railways pay interest not stipulated in the contract.

The CEO of Škoda Transportation, Tomáš Ignačák, counters that the government’s transport chief has kept quiet on the actual reason for the delay; technical norms introduced in 2008 meant the engineering company had to remodel the locomotives to a signification degree, he told journalists.

The chairman of the board of Czech Railways, Pavel Krtek, said that under the court ruling it must pay Škoda Transportation CZK 468 million as part of the purchase price of the engines and another CZK 760 million in interest.

A spokesperson for Škoda Transportation, the traditional supplier of trains to Czech Railways, said the latter could have saved CZK 700 million if it had agreed to an out-of-court settlement the former proposed last year.

Mr. Krtek said that had been impossible as Czech Railways was at the time claiming a CZK 900 million penalty from Škoda Transportation. Agreeing to a deal and dropping that demand would have represented a breach of due diligence, he said.

Czech Railways ordered the 20 three-system 380 line locomotives from Škoda Transportation for around CZK 2.5 billion. They were due for delivery in 2009 but the first was not supplied until 2013.

Škoda Transportation made some fanfare when it launched its 380 line. However, so far they are only in use in the Czech Republic and – with two in operation – Slovakia.

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