Audit: Staff shortages, multimillion losses and ageing tracks at rail infrastructure company

The State Audit Office found serious operational and financial shortcomings at the Public Enterprise for Railway Infrastructure “Railways of the Republic of North Macedonia” for 2024, citing staff shortages, repeated losses and an ageing, partly non-functional rail network.

Audit highlights delays, cost overruns and weak asset records

Auditors noted that of the 1 314 authorized positions at the enterprise only 718 are filled. Most employees are aged between 56 and 60, and 30 percent of staff do not meet required educational qualifications; five percent fail to meet additional conditions set out in the job classification.

The report points to systemic weaknesses in planning and project management on the eastern part of Corridor 8, where works on sections 1 and 2 have been ongoing since 1996. The first section saw the contract value rise by 96 percent (39.7 million euros) and the completion deadline extended by eight years and three months due to project errors, extra works and a change of contractor. The second section, after an 18‑year construction pause and eight years since the loan was signed, only had a construction contract concluded in July 2022 for 155 million euros, with a completion date set for 23 October 2026.

On rehabilitation, construction and reconstruction the enterprise has loans approved totaling 191.4 million euros, of which 44 percent had not been drawn down by the end of 2024. "Therefore, by the end of 2024, EUR 7.78 million in commissions were paid for undrawn funds (EUR 536 thousand in 2024), most for the loan for Corridor 8 – Phase 2. In 2024, on account of interest on loans, whose interest rate is variable and ranges from 4.84 to 5.14 percent, EUR 2.85 million were paid," the State Audit Office said.

Auditors also flagged major deficiencies in the enterprise's asset records. Land valued at 7.2 million denars lacks property sheets, and 91 percent of building assets worth 12.7 million denars are linear infrastructure objects not registered in the Registry of Infrastructure Objects at the Agency for Real Estate Cadastre. For 88 percent of the remaining buildings the enterprise does not possess property sheets proving ownership. Irregularities were also found in the management and recording of inventories — raw materials, spare parts, small inventory, packaging and vehicle tyres.

The audit recorded continuous operating losses. "The loss in 2024 amounts to 188 775 thousand denars, and together with carried losses from previous years reaches a total of 4 724 897 denars," the report states. The auditors warned that ongoing deficits threaten the enterprise’s future operations, its ability to maintain and safely operate the rail network, and its development prospects.

Among the corrective steps the audit calls for are targeted investments to modernize and renew the rail network, immediate improvement of asset registers and stricter human resources procedures — including filling vacancies through public or internal announcements rather than extended temporary reassignments. In 2024, 96 employees were placed on temporary deployment; 55 percent of them did not meet the specific qualifications for the posts and 12 percent did not meet the additional conditions.

Photo: press material from the event