Railway sale clears another hurdle (1st Lead)

Apr 21, 2008, 12:00 GMT

Berlin - The privatization of Germany's railway company, Deutsche Bahn AG, cleared another major hurdle Monday after Social Democratic Party (SPD) leaders agreed a controversial plan to sell off shares in Europe9s biggest rail group.

The move by the SPD national executive to sign off on party chief Kurt Beck's proposal to allow private investors to buy up to 24.9 per cent of Deutsche Bahn's passenger and logistics operations came despite stiff opposition 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 in the run-up to Monday's meeting, the party's Bavarian branch has called for more debate on the implications on the privatization of Europe's biggest railway company.

Deutsche Presse-Agentur sources say while 76 members of the SPD executive voted for the privatization plan, 25 voted against it and 2 abstained.

Analysts say the planned partial privatization should generate about six billion euros (9.5 billion dollars).

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 have a 75.1-per-cent stake of Deutsche Bahn's passenger and freight operations, which together includes about 140,000 employees.

However, the partial privatization means that Berlin would 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.