Republika Srpska Railways Restructuring Project

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The objective of the Republika Srpska Railways Restructuring and Second Phase of the Transport Sector Modernization Program Projects for Bosnia and Herzegovina is to improve transport connectivity of the country along priority transport links and to support improvements in transport operations and asset management practices. The program is multi-phased with a first phase including road sections in FBH, and the second phase including railways in the RS. There are three components to the project, the first component being financial restructuring. The RS Government will convert this debt into equity. This will relieve ŽRS of a historical debt burden associated with IFI and bilateral loans for capital investment, a debt it cannot repay and will put the company on the right path to financial sustainability, with infrastructure capital investments clearly and transparently financed by the government through the multi annual infrastructure contract. The second component is the workforce restructuring. This component will include: (i) support for compensation packages for up to 1,000 employees over the period 2018-2021, and (ii) support to retrenched employees in the form of training and counseling to convert to other sectors of the economy. Finally, the third component is the organizational restructuring. This component will include: planning and implementation of a new, more commercial ŽRS organization structure consisting of a corporate core plus two independently managed and separately accounted business divisions, one for infrastructure management and one for transport operations. Within the operating department sector accounts would be kept for freight business and passenger business. This component will also finance technical assistance to support ŽRS in the implementation of the project as necessary and particularly in two areas: support with organizational restructuring, accounting and business systems; and support with business planning and establishing contractual relationships with government. It will also support project monitoring.