Starting in 2027, Portugal’s state-owned operator CP will have greater management freedom, including more flexibility for hires and acquisition of tools. However, the operator will remain under very strict financial rules, as clarified to RailTech by the national government.
“CP gains more management autonomy. The company ceases to be classified under the public administration boundaries”. This is how the Portuguese government announced on its social networks that CP was leaving the Public Administration Institutional Sector, following a decision from the national statistics office in Portugal.
From next year, Comboios de Portugal (CP) is no longer under the rules applicable to public administration, “getting closer to an entrepreneurial management” model, the ministry said. The decision also “facilitates access to funding and the execution of strategic investments, such as the fleet renovation”, they added.
Not that autonomous
Despite the resolution, CP will remain a state-owned enterprise (SOE). “There is no change in the legal status of the company to a public limited company [PLC]”, the transport ministry clarified to RailTech. This means that the operator still has several budget restrictions: for example, the annual wage update is limited to the government’s determinations. In 2026, the wage bill increase is up to 4.6% compared to 2025. However, that percentage includes salary, promotions and career progressions.
Under an SOE legal status, CP has more difficulties in offering more competitive salaries compared with private railway operators and in additional hiring for train maintenance in workshops. In the aviation industry, for example, the Portuguese fly-carrier TAP is a PLC company despite having the government as its major shareholder.
No more retainage
Still, CP has some benefits from becoming more autonomous. “The company is exempted from the application of the provisions of the Budget Implementation Act and the instructions of the Budgetary Authority, such as the earmarking of funds or authorisation for the carry-over of operating balances,” the ministry highlights.
Removing this limitation is crucial for CP’s cash flow. In April 2020, while awaiting the PSO’s effectiveness, the operator was on the brink of running out of money to pay the salaries, Portuguese medium Publico reported at the time. Under the first Covid-19 lockdown and with very few passengers on board, CP’s expenses were higher than its revenues. With scarce liquidity, the company had to wait for a government authorisation for the carry-over of operating balances.
Fundamental PSO contract
Signed in November 2019, the PSO contract is fundamental to stabilising CP’s finances and complying with the EU competition rules: every year, the operator is compensated for the mandatory services provided all over the country, from the suburban links to regional, interregional and intercity journeys. In case of problems, penalties are applied, and the operator receives less funding. Exempted from the contract is Alfa Pendular, performed by Pendolino fast trains.
Despite being effective only in mid-2020, as reported by Expresso at the time, the PSO contract also established a debt haircut and established the route to transform CP into a PLC company.
The ‘debt haircut’ only occurred in October 2023, fixing a nearly two-decade under-subsidised relationship between the Government and CP: before the PSO contract, the operator was undercompensated for the service provided. To support the yearly increase in expenses, CP had to incur debt to the Portuguese State itself. In 2015, it reached €4.1 billion, forcing the operator to be under the governmental umbrella and subject to budget limitations. Then, several capital injections occurred to reduce the debt: before the haircut, CP’s debt was at around €1.9 billion, as reported by Renascença.
Released from the historical liabilities, CP is allowed to borrow money from the banks to fund the acquisition of up to 20 high-speed trains. For now, the company has Governmental permission to acquire 12 units, worth some €584 million, with the tender to be published; there is an option for eight more units, which has not been activated yet.
The PSO contract with CP is valid for 10 years, with a possibility of extending for five years, according to the EU regulations. Then, the government of Portugal must open a tender for public service obligations, open to every licensed train operator.
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