Budget cuts set the course

first_imgWHEN THE Italian government decided in May to cut 2800bn lire of state funds from this year’s budget for Italian State Railways, President Giancarlo Cimoli pointed out that if 1400bn lire in agreed transfers were not made at once, FS would quickly end up with a negative cash flow and not be able to pay its staff and its suppliers’ invoices. It did not take long for Transport Minister Claudio Burlando to rule that the money would be made available, as a review of the railway’s accounts showed that Cimoli’s worries were ’justified’.The government is seeking to cut its annual grant to FS from 14500bn to 10000bn lire. If this target is to be met, FS will need to continue its efforts to reduce the number of staff on the payroll; the present figure of around 120000 employees could be down to 90000 by 2000. Cimoli has indicated that restructuring could ultimately allow some sections of the business to be transferred to the private sector if financial stability is achieved. But in his view a real improvement in FS finances will only come about if management is given the freedom to set fares and to close unprofitable branches.Meanwhile, just as the general contractor for the Milano – Bologna high-speed line, Cepav Uno, was preparing to get work under way, TAV Managing Director Roberto Renon warned the company to expect significant delays before construction could start. It appears that while full approval has been given for the Milano – Parma section of the line, the public enquiry into the Parma – Bologna section will have to be repeated, and that will not be possible before the end of the year. As a result, 700bn lire in advances has had to be recalled.A go-ahead for the Milano – Torino TAV route is expected this year, and next year should see the government agree that construction can begin on the Milano – Venezia and Milano – Genova lines which form the final elements in Italy’s T-shaped high speed network.HFS has let contracts for management of workshops at Taranto and Foggia to Germany’s Bilfinger & Berger. olast_img read more