Social Democrats expected to give green light to railway sale

Apr 21, 2008, 9:29 GMT

Berlin - Germany's Social Democrat leaders are expected to agree Monday to a controversial plan to sell off shares in the nation's railway company, Deutsche Bahn AG, which analysts say should generate about six billion euros (9.5 billion dollars).

The move by the 155 members to the Social Democrat (SPD) national executive to sign off on party chief Kurt Beck's compromise proposal to allow private investors to buy up to 24.9 per cent of Deutsche Bahn's passenger and logistics operations comes despite stiff opposition to the plan from the SPD's influential leftwing faction.

While Berlin's popular SPD mayor Klaus Wowereit has rejected the planned sell-off of shares in the railway company, the party's Bavarian branch has called for more debate on the implications on the privatization of Europe's biggest railway company.

Germany's daily Berliner Zeitung reported Monday that the SPD leftwing would only agree to the Beck privatization plan if strict conditions were placed on the sell off including that the compromise could not be further softened as part of government negotiations on Deutsche Bahn's stock market debut.

Chancellor Angela Merkel's Christian Democrat-led conservative bloc has signalled support for the privatization plan drawn up the SPD, which is the junior member of Merkel's ruling coalition.

This is despite the compromise unveiled last week by Beck falling short of the 49.9 per cent that Merkel and her supporters have argued for.

Coalition leaders are due to meet next Monday to hammer out details of the privatization, with Deutsche Bahn chief Hartmut Medhorn hoping that he can launch the partial sell off of the Berlin-based rail company later this year.

But while welcoming the Beck plan, senior members of Merkel's party have indicated that they see it as representing possibly the sale of the first tranche of shares in the railway company.

Under the SPD plan, the state would retain a 75.1-per-cent stake of Deutsche Bahn's passenger and freight operations, which together includes about 140,000 employees.

However, under the plan Berlin is to retain a 100-per-cent control of the rail company's railway stations as well as its 34,000 kilometres of track network and energy supplier operations.