Transport - Croatia

Transport plays an important role in international trade which has become more important since independence in reestablishing profitable transit traffic, in promoting tourism and in unifying the country. Croatia has achieved a great deal in the transport sector in the short time since the independence, repairing most war damage, writing laws which are generally suitable for the transport sector of a sovereign state, and privatizing some transport enterprises. However, the State still dominates the transport sector to an excessive degree except for inter-city road transport, and public transport expenditures are more than 6% of GDP which is high. Moreover, the previous Government initiated an ambitious program of motorway and other transport investments to "catch up" with Western Europe which appears unaffordable. However, transport demand has either declined or grown modestly since the war so that there is ample transport capacity with few exceptions, although much infrastructure is in fair or poor condition because maintenance was deferred. Croatia needs to carefully prioritize its investments on the basis of economic criteria.

Croatia aspires to join the European Union (EU) where transport is overwhelmingly market oriented. However, the efficiency of most Croatian transport organizations leaves a lot to be desired. There is significant scope for further privatization and commercialization, as well as reorienting the Government's direct management of the transport sector. This will also help prepare transport enterprises to compete in the EU and reduce total public expenditures in the medium term to around 3% of GDP, closer to the norm for middle income countries.

Transport demand has changed radically since independence. The restructuring of the economy has reduced the movement of heavy goods and favored road transport, as has happened in other transition economies. Most traffic is now international, and flows are reoriented toward Western Europe. FR Yugoslavia and Slovenia no longer use the Port of Rijeka to any significant degree. EU Corridor 10 (via Belgrade), blocked since the war, is only now reopening as is transit traffic through Bosnia Herzegovina. In the meantime, Croatia placed emphasis on EU Corridor 5 (Rijeka-Zagreb-Hungary), which competes with a parallel corridor in Slovenia. Tourist traffic fell sharply due to the war and the Kosovo crisis, but is now recovering. The growth of private automobiles stalled during and after the war, but has now resumed; traffic congestion and pollution are increasing in Zagreb. As a combined result, maritime, port and river transport have fallen dramatically, while truck and airline traffic in particular have grown.

Croatia's transport system is extensive, comprising: (a) about 27,000 km of classified interurban roads and 22,000 km of local roads; (b) a 2,664 km railway network, of which about 250 km are double track and 1,000 km electrified; (c) the main sea ports of Rijeka and Ploce and five secondary sea ports, plus numerous river ports on the 918 km of the Sava and Drava rivers; (d) ocean-going vessels totaling 2.5 million deadweight tons (dwt) plus numerous river vessels; and (e) seven international airports and an international airline.

As a result Croatia's existing transport infrastructure provides ample capacity with few exceptions for a number of years into the future. The railway carries less than a third of its pre-war traffic volume, and rail traffic is not expected to reach pre-war levels for a long time – at best around 2020 according to optimistic forecasts. Even then, more than 90% of rail traffic would be carried on routes adding up to less than 50% of the system, a clear indication of where and by how much the system needs to be reduced. Road traffic densities are also low, with only about 120 km carrying 15,000 vehicles per day (vpd) or more. This means that the majority of Croatia's 440 km of motorways and semi-motorways are underutilized at present. Similarly, maritime transport through Croatia's ports stands at about half of its pre-war level; consultants estimate the capacity of the main Port of Rijeka to be about 11 million tons, whereas it is expected to handle about 2.7 million tons in 2002. Thus, there is obvious over-capacity in ports, with the possible exception of container handling equipment. Croatia is also very well equipped with airports of various sizes and standards. There are, for example, seven airports that can receive wide-body aircraft while only three or four are needed.

The Bank's assistance to Croatia is focused on reconstruction and restructuring activities because of the destruction of war in the early 1990s and the need to modernize transport institutions. Beyond reconstruction, Bank assistance for financing infrastructure investments was requested by the Government for railways, roads and ports including investments for facilitating trans-border trade and transport. The Railway Modernization Project has been assisting the Government and Croatian Railways to restructure the company, including reductions in the labor force and related social measures, gradual privatization of non-core businesses and sustainable reductions in central budget subsidies. Efficiency measures now under way, including cutbacks in non-economic services, will improve Croatian Railway's financial standing and reduce the need for fiscal transfers in the future.

The Rijeka Gateway Project aims at increasing Croatia's trade competitiveness by improving the international transport gateway through Rijeka. Specific objectives include:

a) increasing efficiency and improving environmental and social conditions at Rijeka Port by preparing to privatize port operations, rehabilitating infrastructure and replacing equipment;
b) improving the financial performance of Rijeka Port with a view to reducing Government contributions in the medium term;
c) preparing to redevelop part of Rijeka Port for urban purposes;
d) improving international road connections linked to the Rijeka gateway, and the administration of the road sector.
The project include rehabilitation and construction works at the Rijeka port, construction of the western part of Rijeka bypass and connecting road to the port, rehabilitation of Krk bridge, rehabilitation of a section of the Zagreb-Macelj motorway, elimination of black spots, the purchase of port equipment and software for the Port of Rijeka Authority and the Luka Rijeka port operator, and redundancy payments and a social program for surplus Luka Rijeka workers. Technical Assistance aim at: preparing to privatize port terminal operations, preparing for urban redevelopment of a port area, assisting Croatian Motorways to obtain an ISO 9002 certification and satisfactory bond rating, assisting Croatian Roads to implement the pavement and bridge management systems and to enforce axle load regulations.

Transport Development Strategy of the Republic of Croatia (11/1999)

The Transport Development Strategy (788kb, MS Word) for the Republic of Croatia is the first long-term transport system development study enacted in the independent and sovereign state of Croatia. This document could only be prepared after extensive systematic changes and stabilization of the Croatian economy, including the transport-related sector of the economy. As a part of this process, in addition to reconstruction of the transport infrastructure destroyed during the war, certain transport systems had to be completely transformed, previous transport policies had to be revised, the importance of major Croatian transport routes had to be confirmed on the European level, new development studies had to be prepared on a scientific basis and specific projects of reconstruction and development had to be defined. Given the circumstance, carrying out of these projects could not be delayed and undertaking them ensured an inflow of foreign capital.

Resources for

Croatia