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Funding WP 1.2 Survey of Experience in the EU. A. G ühnemann, P. Mackie, N. Smith, A. Whiteing December 2005. WP 1. Survey of Experience in the EU. Aim & Methodology Review institutional setup and fund raising methods of infrastructure funding in Europe For European funds and - PowerPoint PPT Presentation
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Funding WP 1.2Survey of Experience
in the EUA. Gühnemann,
P. Mackie, N. Smith, A. WhiteingDecember 2005
WP 1. Survey of Experience in the EU
• Aim & Methodology– Review institutional setup and fund raising
methods of infrastructure funding in Europe• For European funds and • for selected case studies (national systems +
projects)
– Use resources from • European research projects, • European + national transport (funding) bodies• Interviews with key representatives
– Assess performance • along WP 1.1 questions and criteria
Status Quo of WP 1.2• Work in Progress
– Review of EU / International funding– Case study descriptions
• Selection of case studies– Infrastructure funding in a cooperative federal
system (Germany)– Infrastructure funding in a centrally organised
system (UK / England)– Privately financed motorway in New Member
State (M1/M15 Hungary)– Infrastructure fund public / private (Asfinag, A)
Case Study Questions• Planning and financing framework, institutional aspects
– political bodies / authorities / agencies– modal responsibilities (air, ports, road, rail, public, local transport)– companies (state owned and private)– external influences (lobby groups, planning culture / hidden rules)
• Fund raising methods– type of funding: mark-ups on transport activities, mark-ups on
user costs, earmarked taxes, general budgets (taxes / debts)– costing methods (average, marginal, mix)
• How money is spent– type of projects / modes– subsidies loans
• Performance issues– accountability / transparency– multi-agent / shared responsibilities (cross-border etc.)– efficiency (under-investment, targeted)– cost recovery + rules for cost overruns
Germany• Institutions: tiered responsibilities
– subsidiarity + cooperative federalism
State Department for Transport
e.g. UVMBW Baden-Württemberg
Regional Councilse.g. Freiburg, Karlsruhe, Stuttgart,
Tübingen
Lower Administrative Bodies, Regional HighwayAuthorities / Agencies, Road Transport Administration
*Federal Ministry of Transport, Building and Housing
BMVBW
German Road Infrastructure Financing
• Federal roads – Fund raising
• Public budgets (e.g. fuel tax, vehicle tax)• User charges (Heavy Vehicle Toll)• PPP models
– Transport Infrastructure Financing Society• State roads
• public budgets (tax transfers, e.g. vehicle tax)
• Local roads• public budgets (tax transfers, fixed budget 1.67 bill. €)
(Gemeindeverkehrsfinanzierungsgesetz)
• National:– Federal Government ↔ DB Netz AG
Rail Infrastructure
• Public budgets– construction
costs– financial grants
(subject to negotiation)
– part of reinvestment
• Track charges– annual depreciation
• Regional – Federal Government ↔ Federal States– Regionalisierungsgesetz (regionalisation law)
• tax transfers, budget line with growth rates
Lessons LearntIssues for Consideration • high coordination efforts• problems in cross-border coordination (states + national)
– different state of roads• tendency to manifest current status • inflexibility in investment decisions in accounting system,
– no horizontal transfer of funds possible (exception: new fund)• funding levels vary strongly between budget years; subject
to change if political situation changes• responsibility of federal level goes too far
– funding of predominantly regional and local roads • cost overruns in major railway projects led to delay of
necessary reinvestment to the future ( risk allocation)• debate on mode specific earmarking of user charges for
infrastructure maintenance and extension; • discussion about creditability of funding agency
Asfinag (Austria)• Responsibility:
– plans, finances, constructs, maintains and operates the Austrian motorway and highway network
– Strategic planning in federal master plan• Refunding by
– National investments– Tolls
• Distance dependent heavy vehicles’ toll• Time dependent cars and light vehicles
– Funds raising on financial markets
Road financing in the UK • Central planning (England: DfT)• Phases of financing
– Earmarked taxes (until 1920s)– General budgets (road user taxation) (until 1990s)– PPP according to Ryrie Rules
• no additional but replacement of public funds• genuine risk transfer to private sector
– PPP according to PFI (first road scheme 1994)• additional, if better than public “comparator”• DBFO contracts• refunding by shadow tolls
– Binary model (since 2000)
PFI for Roads in the UK• Department for Transport (1.10.2005):
– 37 projects (out of ~ 300)– capital spent ~ £ 20 billion (54% of total )
• Lessons learnt from PPP models– Benefits
• Reduction of Construction and Operating Costs• Efficiency Gains
– Risks• Higher costs of financing (>= 5%)• Transaction costs• Fiscal effects• Postponement of costs to future taxpayers• Risk (+ benefit) allocation
Case Study M1/M15 Vienna-Budapest
• Privately financed toll motorway– Motivation: Insufficient funds from public budgets (road
user taxation)– Finance, build, own, operate contract
• Awarding Process– Prequalification (1991)– Tendering Phase (1992) Final Decision
• Concession Company SPV Elmka created (1993)
• Operation– less traffic growth– high toll rates court ruling
• Re-Nationalisation
Case Study M1/M15 Vienna-Budapest
• Lessons learnt– Financing and building of motorway in short
time with virtually no cost overruns(despite economically difficult situation)
– Traffic substantially below expectations– Relatively robust financial structure– Conflict of interests
• revenue oriented vs. public interest
– Success factor: Commitment and full and sustained support of the Client/Principal
European & International Funding Bodies
• Review of various multinational agency publications
• Questions to key representatives– political and legal differences between Fund
and budget line in the EU– key rules of the Fund
• autonomy• rules and principles• flexibility
– Lessons learnt for Transport Fund• e.g. appraisal criteria
Summary & Outlook• Lessons learnt from four
representative types of financing– responsibilities / problems in federal and
central funding system– PPP and private funding experiences– setups of infrastructure funds
• Question for discussion– Are they representative?– Are there other lessons learnt from
other countries?