Railway of Moldova enterprise enters reorganization: assets to be evaluated before company is split into two entities

The state enterprise, Railway of Moldova (CFM), is undergoing a full reorganization process after the government has approved the division of the company into two distinct entities. The director general of the Public Property Agency (APP), Roman Cojuhari, made statements to this effect, providing details on the technical and financial stages required for the reform.

According to Cojuhari, the reorganization involves creating two structures with different duties: an enterprise that will manage the railway infrastructure and a joint-stock company that will handle transport operations – both freight and passenger transport. The measure aims to align the railway sector with organizational models applied in European states, where infrastructure is separated from the operation of transport services.

Assets’ valuation – a mandatory step before reorganization

The APP director explained that national legislation required the establishment of share capital for the new entities, and this cannot be made without determining the real value of the assets to be transferred.

“When an enterprise is reorganized or a new one is created, its share capital must be formed. For this, we need to know the value of the assets that will be included in the capital. The current valuation does not reflect reality, because it was carried out a long time ago,” stated Roman Cojuhari.

For this purpose, the APP has launched a tender to select specialized companies that will perform the valuation of CFM’s assets. To speed up the process, the assets have been divided into three geographical lots – north, center and south – and the selected firms will have four months to complete the work.

Which assets will be evaluated

The inventory covers an extensive portfolio of assets, including:

309 buildings;

312 special constructions;

1,451 units of equipment;

50 means of transport;

3,098 units of rolling stock (freight wagons, passenger coaches and locomotives);

459 large-capacity containers.

The total value of the valuation contracts is estimated at approximately 7.8 million lei. According to Cojuhari, the money will be allocated from the state budget and is provided for in the Economic Growth Plan.

The real value of CFM currently unknown

The APP director stressed that the authorities cannot, at this moment, indicate the market value of CFM’s assets, because the current share capital of the enterprise no longer corresponds to economic reality.

“After the companies complete the valuation, we will know exactly what the market value of these assets is,” he specified.

The results of the valuation will serve as the basis for setting the share capital of the new entities and for dividing the assets between the infrastructure administrator and the transport operator.

The goal of the reform

The authorities state that the reorganization of CFM is an essential step for modernizing the railway sector, which has been facing financial problems, outdated infrastructure and declining transport volumes for more years. Separating infrastructure from operations is expected, in order to enable more efficient resources’ management attract investments and enhance the competitiveness of rail transport.

After the completion of the assets’ valuation and the establishment of share capital, the government will be able to move on to the effective creation of the new entities and the transfer of assets, a stage that will mark the beginning of the structural reform of the state railway enterprise.