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France Seeks EU Deal to Avoid Repaying Rail Freight Aid

(Bloomberg) -- French Transport Minister Clement Beaune said the government is in talks with the European Commission to avoid reimbursing some €5.3 billion ($5.7 billion) of state aid received by the country’s rail freight operator.

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“I think we’ll reach an agreement,” he told Les Echos newspaper. “Paying back this aid would kill Fret SNCF, and presumably rail freight in France.”

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The commission said in January it would investigate state aid given between 2007 and 2019 to the freight unit of state-owned rail operator SNCF.

Beaune, who earlier met with labor unions and management at Fret SNCF, said the government aims to avoid redundancies, any shift of business to road haulage or privatization of the company, and maintain a single public freight entity controlled by SNCF.

Despite recent pushes to lower carbon emissions, rail freight transport has declined by 43% since 2000 in favor of trucks, according to the French government. SNCF Fret employs some 5,000 people and handles about half of train transportation of goods, according to Beaune’s office.

The minister said the government will increase support for rail freight to €200 million a year from 2025 from €170 currently in a bid to maintain a target to double the share of train freight from 9% in 2019.

He added that €4 billion will be invested to repair aging rail freight infrastructure through 2032.

The commission could make a decision by the end of the year, according to an official in Beaune’s office, who asked not to be identified to comply with government rules. If SNCF Fret has to reimburse the sum, the company will enter liquidation, the official said.

(Updates with detail of investment in rail freight in seventh paragraph.)

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