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 Home / About Us / Communication / News / EURORAIL - finding out about further project development possibilities and PPP... 
EURORAIL - finding out about further project development possibilities and PPP... «  Back

EuroRail 2005

January in Berlin is definitely gloves weather. Gloves, scarves, and shoes with heels that grip the ice. It was amid this wintry cityscape of slippery pavements, wide empty boulevards and clear blue skies that 250 delegates convened for the 8th Annual EuroRail conference. Participants included national strategic rail authorities, international rail operators, manufacturers, infrastructure owners, freight companies, civil servants and consultants from across Europe. NWE bodies included DeutscheBahn, Belgian Cargo, SNCF, Dutch Rail Holding, English Welsh and Scottish Railway, and the UK's Rail Safety and Standards Board. Key speakers included Zoltan Kazatsay, Deputy Director General, Directorate-General for Energy and Transport, UK Strategic Rail Authority and Network Rail representatives Giles Thomas (SRA, Director European) and Agnes Bonnet (SRA, Head of European Affairs) and Michael A Robson (Network Rail, Head of European Affairs) and Lord Tony Berkley.

A one-day pre-conference workshop on TENs-T financing addressed in detail the issue of Public-Private partnerships for the financing of cross-border sections of the priority trans-European network projects. The two-day plenary was packed with speakers who addressed railway liberalisation and the 'Third Railway Package'(a long period for the liberalization of international passenger traffic lasting until January 2010:, government control and private sector initiative, and the needs of European rail in 21st century. Many pressing and contentious questions were raised throughout the presentations and panels: How best to build competitive high-speed rail routes in Europe? Do low cost airlines represent a significant threat to international rail travel? How to develop a thriving rail freight industry? How best to ensure cooperation between European infrastructure managers? How to ensure fair competition while ensuring safety?

Passenger transport

Murray Hughes, editor of Railway Gazette International, one of the most important English-language journals on rail transport (in addition to 'Rail and Transport International) chaired an afternoon session on pan-European rail travel. The key note speaker, Mireille Faugere, Director of France, Voyages, Europe at SNCF spoke of the French TGV success story and emphasised the importance of service quality in order to win market share. Understanding customer needs was also reiterated by Jean-Michel Dancoisne, General Manager of Thalys International, who spoke at length of the need to be able to compete with the €29.99 psychological price barrier often set by the cheap airlines.

Tom Selfridge (right), Vice Chairman at Strathclyde Passenger Transport, said he attended the event to learn about the longer-term strategic issues of relevance to Glasgow, given that he is usually confronted with the day-to-day operational concerns of ensuring effective passenger transport in Scotland's largest urban area.

PricewaterhouseCoopers, part organisers of the event provided case study information on successful transport initiatives such as the TransPennine Express, a new franchise which began on 1 February 2004 and which brought a commitment to invest ฃ260m (€375m) over 8 years to provide more efficient inter-city services to 13 million passengers in the Leeds-Manchester-Sheffield region.

Interreg IIIB North-West Europe project HST Connect was represented by its Project Coordinator, Georg Werdermann who used the event as a means to make contacts in the field of high-speed rail and to promote the SEEDA-led project. He stated, 'The Berlin event is about making a real start to turn the wheels towards the East.

Rail freight

Georg (right) was joined by his SEEDA colleague, Arno Schmickler (below left), who, as regional project facilitator, is closely involved in the project development process for the sister project, HST Integration, as well as the rail freight project, FINESSE. Arno was particularly impressed with one of the anecdotes told by a member of Connex Cargo which highlighted the problems inherent in attempting to make advances in European rail freight. Connex had sought to extend freight operations from Germany to its neighbouring countries.

On approaching its neighbours 6 months ago with the proposal to operate rail freight services across the borders, the Swiss authorise took just a couple of days to reply with an affirmative answer, Austria took 6 weeks and France, well… they are still awaiting the reply. This practical example illustrates the challenges which need to be overcome to make Europe work – the Interreg programme and particularly the transport strand of projects can provide innovative solutions to address these challenges on a regional, national and European level.

Other press representation was provided by Isabel Lesto (below right), Road and Rail Reporter for International Freighting Weekly, and fairly new to European transport affairs, asserted that the event was extremely useful in helping her on her steep learning curve by getting to know the key players and issues at stake post-enlargement.

The conference addressed the issue of enlargement and its implications for the development of pan-European freight corridors and trans-European rail freight freeways (TERFFs). Vasile Ciobica (below right) from Bucharest, currently working in Frankfurt, spoke of the bureaucratic problems inherent in cross-border rail operations. Freight in transit across the Romanian network passes from Hungary to Turkey, or Bulgaria and the Ukraine. Although it is technically possible to carry out the technical transfer from one network to another in 30 minutes, officials often insist on 6-7 hours for reasons of immigration, trafficking and administration.

How to address these problems? Joachim Kroll, Secretary General of RailNet Europe explained its involvement in the international planning process and the logic behind bringing 26 rail infrastructure managers from 23 countries together. Together they operate 250,000kms of rail network across Europe with their target groups being the railways service providers. RailNet Europe aims to promote better access to the network and promote private rail traffic with enhanced quality and better efficiency. Acting together as one single infrastructure company – though with no intention of becoming a single entity - they seek to promote 'one-stop shops' (seamless rail freight corridors) with real-time traffic information and streamlined bureaucracy.
Whereas many of the contributions were focused on the day-to-day work of a train operating company, Dr.Ing. Gunther Ellwanger of the INTERNATIONAL UNION OF RAILWAYS (UIC) ( focused on the future development of the European passenger traffic in terms of railway infrastructure. He referred to a strategic approach to deal and develop the European railway network that involves PPPs.

Private sector financing

The issue of private sector financing was discussed throughout the 3 days. Securing private sector finance remains a highly complex matter. What seems apparent is that, despite all the talk of Public-Private Partnerships, there are little or no examples of real PPPs in action for international transport projects. Oft cited is their involvement in the London underground, but what exactly is a PPP?

Government collaborates with the private sector to transfer the risk to the private sector; these contractors may then even transfer the risk to subcontractors. Risk is offset by financial compensation for delays or non-delivery that is introduced into all contractual agreements. What is unusual is that in a PPP arrangement the government will specify its desired outputs, not the inputs. The discipline of the tendering process and the fact that private companies carry financial burdens should they fail to deliver means that there is less likelihood of cost overruns. The advantage of PPPs is that the government can tender out the effective and quality provision of services over a longer time frame (e.g. 30 years), rather than simply asking contractors to build rail infrastructure. Government is thus 'incentivised' (a word used a lot in Berlin!) to use PPPs as the best value over the lifetime of the service, not just the cheapest solution for building – 'whole lifetime costing'. A PPPs set up is administratively much simpler: government deals directly with one contractor who then makes the necessary financial calculations with sub-contractors to bring the project in on time and to cost.
Much was said of the Perpignan-Figueras link (an 8km international tunnel section), recently underway through the Pyrenees, as an example of a PPP. That was, until the end of the workshop when a member of GIF, the Spanish railway infrastructure owner informed the group that in fact it was not a PPP but a 'government concession'. Definition, anyone?

Future project development

Georg Werdermann asked the very pertinent question as to whether or not – and if so, how – European money such as structural funds could be used within a PPP. The response was that, in principle, perhaps, but that it would be highly complicated given the involvement of private funds and the long-term planning procedures necessary. This is an issue to be investigated further, particularly given the slower than expected implementation of the TENs priority projects, the limited size of the TEN-T budget and the limited (though significant) financing capacity of the EIB.
 Another important point raised which may yet be addressed within the HST strand of projects is the quantification of the benefits of TENs. What is certainly true is that the TENS were drawn from a national 'wish-list', and that there was little cost-benefit analysis employed to calculate the real priorities for the European economy. As such, the EU-wide benefits of completing the TEN were not taken on board. Why not a research study on the wider growth of from transport infrastructure investments for the NWE or even the effects of 'non-TENs' Europe-wide? The EIB knows of no such study to date, only spatial analyses.
 Finally, with proposals for programmes in the next period able to involve countries outside programme boundaries to 20% of total project budget and non-EU countries to 10%, there is clear scope for Interreg to be used to address rail freight and passenger transport issues that extend the west-European network eastwards. If LIIIFT proves successful, the concept of 1000m freight train could be tested on west-east corridors to Russia. Similarly, the lessons from high-speed rail might be transferred to the new EU members who have yet to embark upon such ambitious investments. The conclusions of the FINESSE project, in terms of intermodal freight transport across the Straits of Dover/La Manche might be shared with Black Sea regions. As Arno Schmickler exclaimed, 'For SEEDA as a regional development agency the conference provided excellent opportunities to build up international contacts and to discuss the implications of the enlargement of the European Union. Although England will become a more peripheral area in spatial terms it will still be an important part of the European economic powerhouse, hence physical as well as virtual connectivity across the enlarged European area is crucial for sustainable development.'

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