Universität für Bodenkultur WienDepartment für Raum, Landschaftund Infrastruktur

Gerd SammerProf. at the Institute for Transport StudiesUniversity of Natural Resources and Life Sciences, Vienna, Austria

United Nations Economic Commission for Europe Trans-European Motorways (TEM) Project -Trans-European Railway (TER) Project

Conference on Financing development of road and rail transport infrastructures

November 17th, 2010Vienna

Rail Financing

Recommendations

File: Persönl. Verzeichnis/Sammer/Vorträge/2010_11_17_TER_Vienna/

IST, Dept. RaLI, BOKU Vienna 2

Outline

• Development of TER-rail transport

• Problem analysis

• Recommendations

IST, Dept. RaLI, BOKU Vienna 3

Austria

Hungary

Italy

Czech Republic

Poland

SlovakiaRomania

GreeceLithunia

Slovenia

Passenger Transport, Interurban RailTER countries of EU

Source: Prognos 2010

IST, Dept. RaLI, BOKU Vienna 4

Passenger Transport, Interurban RailTER countries of Non-EU-members

Belarus

Russia

Ukraine

Croatia

Turkey

Macedonia

Source: Prognos 2010

IST, Dept. RaLI, BOKU Vienna 5

Goods Transport, RailwaysTER countries of EU

Source: Prognos 2010

Czech RepublicHungary

ROAD

RAIL HungaryItalyItaly

Austria

Poland

Slovakia

Romania

Lithunia

Slovenia

Greece

IST, Dept. RaLI, BOKU Vienna 6

Source: Prognos 2010

Goods Transport, Railways TER countries of Non-EU-members

Croatia

Belarus

Turkey

Macedonia

Russia

Ukraine

RAIL

ROADCroatia

IST, Dept. RaLI, BOKU Vienna 7

Message

• Passenger transport demand of rail− stagnation / low growth− loss of market share against car

• Goods transport demand of rail− low and strong growth− setbacks in growth− strong competition against road

• Strong need for action− keeping high level of goods transport

IST, Dept. RaLI, BOKU Vienna 8

Financing Sources and InstrumentsTER-Countries

26 %

2 %9 %6 %

57 %

2010 → Future

→ ∆: 0 %

→ ∆: +1 %→ ∆: 0 %→ ∆: +2 %

→ ∆: -3 %

Tax resources

Private SectorCross payment

Borrowing (public)

EU-grants

30 %

29 %

0 %

33 %

8 %

2010

(1) selected countries

→→→→ Future

→ ∆: -3 %

→ ∆: -5 %

→ ∆: +4 %

→ ∆: -5 %

→ ∆: +9 %(1)

IST, Dept. RaLI, BOKU Vienna 9

Estimated and Real Construction Cost, 58 Railway Projects

Source: Flyvbjerg 2003

IST, Dept. RaLI, BOKU Vienna 10

Estimated and Real Demand57 Railway Projects

Source: Flyvbjerg 2003

11,3

26,4

30

11,3

7,5 7,5

3,6 3,6

0

10

20

30

-100 -80 -60 -40 -20 0 20 40 60 80 100 120 140 160 180

Rel

ativ

e fr

eque

ncy

of p

roje

cts

in %

Difference of real minus before estimated travel de mand in %

Mean value of overestimation = 39%

IST, Dept. RaLI, BOKU Vienna 11

Recommondation (1): Financial Sources

• Fair cost-sharing between users & taxpayers

• Longterm goal: internalisation of external cost

• Shortterm: cross-payment from road to rail

IST, Dept. RaLI, BOKU Vienna 12

External Cost of Road and Rail

€-cent per passenger-kilometre plus tonne-

kilometreAustria 2005

Road Rail

Noise 2.6 0.2

Air pollutant 0.7 0.1

Greenhouse gas 5.4 0.4

Environmental costs in total

8.6 0.6

Accident cost 3.1 1.5

Total external costs ~11.7 ~2.1

Germany 2000/2007

Road Rail

1.1 ?

0.9 ?

1.3 ?

5.1 ?

1.0 ?

~9.4 ~2.0

Source: INFAS/IWW 2004, DIW Berlin 2009, Hirte 2008, Pischinger 1997

IST, Dept. RaLI, BOKU Vienna 13

Recommondation (2): Pros and Cons of P.P.P.

• Pros

- Not registered on public balance sheets

- Efficient cost- and implementation management

- Risk sharing between public and private sector

• Cons

- Only high profitable projects

- Unbalanced risk sharing (?)

- Efficient cost- and implementation managment also achievable with „functional tendering and bidding“

- Private investors: higher interest rates than governmental corporations

IST, Dept. RaLI, BOKU Vienna 14

Recommondation (3): Planning Culture

• National transport masterplan

- infrastructure + transport policy

- all modes

- defined quantitative objectives

• Decision principles

- cost-benefit oriented decisions

- fact-oriented priorities & implementation

- efficient project management

- longterm financing plan

IST, Dept. RaLI, BOKU Vienna 15

Recommondation (4): Assessment Instruments

• Standardized cost-benefit-analysis (CBA)

• Introduction new assessment instruments

- sustainable development analysis (SDA)

- extended cost-benefit-analysis

• Transparency and public participation

IST, Dept. RaLI, BOKU Vienna 16

Recommondation (5): Cost Reduction

• International standardisation of railway guidelines for railway infrastructure, vehicles and operation

• Improvement of risk assessment and management

• Introduction of „functional tendering and bidding“

IST, Dept. RaLI, BOKU Vienna 17

Recommondation (6): Organisational Model

• Improvement of efficiency of railway organisation

• Clear political, legal, institutional, financing fr ame work conditions

• Decisions based on transparent assessment findings

• Reduction of influence of lobby groups

IST, Dept. RaLI, BOKU Vienna 18

Conclusion

• Successful railway financing → result of political willingness

• No political decision → decision for continuation as hitherto