The Commission applies for the first time the Community guidelines on state aid for rail operators approving a Czech aid regime for interoperability

Last year the European Commission released the Community guidelines on State aid for railway undertakings ([2008] OJEC C 184/07). The aim pursued by the Commission with the Guidelines is to provide guidance on the EC compatibility of aids to railway undertakings. Public financial support is an important source of funding for the rail industry and the EC legal regime for public financial support to this sector is quite complex. It is understood that a sound regulation of the financial relationships between states and railway undertakings is desirable as that should prevent distortions of intra-mode and inter-mode competition. To this end, by the Guidelines the Commission clarifies its position on the interpretation and application of Articles 73 and 87 EC and of other relevant instruments to aids to railway undertakings. The Guidelines also constitute an implementation of the Commission’s 2005 Action Plan aimed at the modernization of state aid policy. In sum, the Commission intends to improve the transparency of public financing and legal certainty within the rail transport market which is progressively opening up to competition. The Guidelines applies to five forms of public financing:

· aid for the purchase and renewal of rolling stock;

· cancellation of debts of railway undertakings;

· aid for restructuration of railway undertakings;

· aid for the needs of transport coordination;

· state guarantees for railway undertakings.

Aid for the needs of transport coordination, in turn, encompasses, among other things, aid for promoting interoperability. The eligible costs covered by this form of aid, are, to the extent to which they contribute to transport coordination, the investments for the installation of safety systems, interoperability and noise reduction both in rolling stock and rails, with an intensity of 50% of the eligible costs.

Recently, the European Commission by applying for the first time the Guidelines has authorized a state aid regime notified by the Czech government regarding the funding of investments in the interoperability of rail transport (case N469/2008, Press release IP/09/143, 28 January 2009, Interoperability in rail transport). The Commission has found the regime to be compatible with the EC Treaty. The measure will last five years. The total volume of the aid amounts to CZK 1 billion (€ 40 million), 85% of which should be covered from the Cohesion Fund and 15% from the State budget of the Czech Republic.

The objective of the regime is achieving technical and operational interconnection (interoperability) of the railway systems in the Czech Republic and those in the neighbouring countries and the promotion of interoperability among rail transport operators. The individual projects covered by the regime should reduce both the environmental impact of rail transport as well as the number of accidents. A further purpose of the regime is to expand public transport and support innovation. It would thereby increase the attractiveness of rail infrastructure so that railway transport can compete effectively with other modes of transport. In short, the regime is instrumental in strengthening inter-mode competition between rail and other carriers, which is seen by the Commission as an important tool to revitalize rail transport.

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