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Interoperability of the Railway Infrastructure Architecture of stable finance support of European railway sector as an important precondition for success of the interoperability implementation. Libor Lochman Deputy Executive Director, CER Prague, 12 March 2009. CER – function and work

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Presentation Transcript
slide1

Interoperability of the Railway Infrastructure

Architecture of stable finance support of European railway sector as an important

precondition for success

of the interoperability

implementation

Libor Lochman

Deputy Executive Director, CER

Prague, 12 March 2009

slide2

CER – function and work

Maximising efficiency of EU railway policy

Main areas of CER work

  • Members: 72 railway operators & infrastructure companies
  • Geographically: entire European area (incl. Switzerland, Norway, EU accession states and EU aspirants)
  • Partnerships with railways beyond Europe

Representing European rail sector in EU

Pro-active shaping of EU agenda

Own initiatives

slide3

Representing the EU rail sector towards the EUCER – working structure

MEMBERS: 72 rail operators and infrastructure companies

  • COMPANIES
  • Freight
  • Passenger
  • High-speed
  • Infrastructure
  • Integrated
  • National associations

Other railway organisations

e.g. EIM, UIC, UNIFE, CIT, OSJD, OTIF, AAR, RŽD etc. and ETF

Other internat. organisations

World Bank, EIB, UNECE, UNIDROIT

Commissioner for Transport

TRAN Committee

Council of Transport Ministers

European Railway Agency (ERA) *

European Commission

European Parliament

Council of the EU

EUROPEAN INSTITUTIONS

* The ERA’s main task is to draft proposals for the Commission on railway interoperability and safety

slide4

Pro-active shaping of EU agenda

Problems are now acknowledged by European Commission:

> insufficient compensation of public services

> cross subsidies between freight and passenger prevail

> freight track access charges are too high, government network contributions too low, networks deteriorate

EXAMPLE Dramatic fin-ancial situa-tion in Central and Eastern European countries

Total capital of rail sector in CEEC:1995: 28 bln EURO 2006: 4 bln EURO

Debt of CEEC rail sector:

1995: 2,7 bln EURO 2006:10,5 bln EURO

Source: CER/NERA Financial Database

slide5

Huge financial deficit

  • In contravention of Directive 2001/14 many rail and infrastructure companies are underfinanced.
  • Public sector contributions has been insufficient:
    • infrastructure managers cannot meet maintenance and renewal cost
    • rail operators are not sufficiently compensated for public service obligations.
  • As a result, IMs attempt to cover their costs:
  • track access charges are generally high in CEEC
  • the quality of the rail infrastructure network and rolling stock continues to deteriorate rapidly
  • rail transport in Central and Eastern Europe becomes less competitive

Where we are?

slide6

Pro-active shaping of EU agenda

Problems are now acknowledged by European Commission:

> insufficient compensation of public services

> cross subsidies between freight and passenger prevail

> freight track access charges are too high, government network contributions too low, networks deteriorate

EXAMPLE Dramatic fin-ancial situa-tion in Central and Eastern European countries

Total capital of rail sector in CEEC:1995: 28 bln EURO 2006: 4 bln EURO

Debt of CEEC rail sector:

1995: 2,7 bln EURO 2006:10,5 bln EURO

Source: CER/NERA Financial Database

slide7

Adequate financing of infrastructure

Based on agreed multi-annual contracts (MACs), infrastructure must be properly financed to allow safe, quality services to customers.

The obligation for Member States to finance infrastructure is stated in Article 6 of Directive 2001/14, where it reads:

”[…] the accounts of an infrastructure manager shall at least balance income from infrastructure charges, surpluses from other commercial activities, and State

funding on the one hand, and infrastructure expenditures on the other.”.

Background

slide8

Pro-active shaping of EU agenda

Problems are now acknowledged by European Commission:

> insufficient compensation of public services

> cross subsidies between freight and passenger prevail

> freight track access charges are too high, government network contributions too low, networks deteriorate

EXAMPLE Dramatic fin-ancial situa-tion in Central and Eastern European countries

Total capital of rail sector in CEEC:1995: 28 bln EURO 2006: 4 bln EURO

Debt of CEEC rail sector:

1995: 2,7 bln EURO 2006:10,5 bln EURO

Source: CER/NERA Financial Database

slide9

Pro-active shaping of EU agenda

Problems are now acknowledged by European Commission:

> insufficient compensation of public services

> cross subsidies between freight and passenger prevail

> freight track access charges are too high, government network contributions too low, networks deteriorate

EXAMPLE Dramatic fin-ancial situa-tion in Central and Eastern European countries

Total capital of rail sector in CEEC:1995: 28 bln EURO 2006: 4 bln EURO

Debt of CEEC rail sector:

1995: 2,7 bln EURO 2006:10,5 bln EURO

Source: CER/NERA Financial Database

slide10

Adequate financing of infrastructure

Alarming facts

Average running expenditures per km track length almost 60% higher in EU15 than in EU12;

Average investment in existing rail infrastructure (rehabilitation) almost 80% higher in EU15 than in EU12

Average investments in new infrastructure is about 53 times larger in EU 15 than in EU 12

slide11

Adequate financing of infrastructure

  • Application of high access charges to compensate for insufficient public support
  • Absence of medium & long-term planning
  • Delay compensations
  • Downward spiral of decline
    • - the lack of reliability and the declining quality of services
    • - the lack of liquidity forces infrastructure companies to finance their needs
    • Access to capital markets for renewal or new rail infrastructure investments difficult

Issues of concern

Lack of resources for modern

interoperable subsystems

slide12

Adequate financing of infrastructure

  • Maintenance governments must:
  • carefully determine budget priorities
  • agree with infrastructure managers on the
  • level and scope of maintenance activities.
  • Resources for maintenance have to be balanced with money for new projects, such as interoperable TEN-T corridors.

Solution?

!

Fiscal capacity and

indebtedness necessary

to finance large projects

slide13

Adequate compensation of public service obligations

Public service obligations must be properly compensated, including a reasonable profit.

The obligation for public authorities to compensate public service requirements is clearly stated in Article 6 of Regulation 1191/69 (still in force) and reiterated in Regulation 1370/2007.

Background

slide14

Adequate compensation of public service obligations

  • Compensation through commercial revenues
  • Quality implications
  • Modal shift
  • Competitiveness
  • Low availability of rolling stock

Issues of concern

Unavailability of resources to afford interoperable vehicles

slide15

Adequate compensation of public service obligations

Solution?

Number of measures should apply:

Transposition

of Public

service regulation

Long term contracts

PPP &

EU co-financing

Innovative financing

(leasing)

slide16

Conclusions

Whilst basic EU legislation exists, an adequate financing is still lacking !!!

The financial burden appears to be increasing in many railway undertakings and infrastructure managers throughout the EU

Completion of a sustainable financial architecture is therefore a matter of supreme importance to create a competitive and interoperable European rail system

What to do?