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CER view on South East Europe: Balanced investment and financial stability Zagreb, 17 June 2005

CER view on South East Europe: Balanced investment and financial stability Zagreb, 17 June 2005 Ad Toet Advisor Central and Eastern European Countries Community of European Railway and Infrastructure Companies, CER. CER – Community of European Railway and Infrastructure Companies.

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CER view on South East Europe: Balanced investment and financial stability Zagreb, 17 June 2005

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  1. CER view on South East Europe: Balanced investment and financial stability Zagreb, 17 June 2005 Ad ToetAdvisor Central and Eastern European CountriesCommunity of European Railway and Infrastructure Companies, CER

  2. CER – Community of European Railway and Infrastructure Companies • The CER brings together 44 railway companies and infrastructure managers from the EU Member States, the EU accession countries Norway, Croatia, Serbia/Montenegro, Bosnia/Herzegovina and Switzerland • The CER deals with all policy areas of significance to railway transport • The CER offers advice and recommendations to policy makers in Brussels • The CER works in close collaboration with the Paris-based UIC

  3. Content of this presentation CEEC issues (Re-)Balancing investment in EU transport infrastructure 5 Issues for rail in Central and Eastern Europe South East Europe

  4. Unbalanced taxation between transport modes– Taxes vs. environmental damage • Rail is significantly less environmentally damaging • Road taxes less than environmental damage; • rail taxes more than environmental damage (road) (rail) Environmental damage in Euros per thousand ton-km Taxes on operations in Euros per thousand ton-km Source: ECMT (2003), CER

  5. Unbalanced development Railway Lines and Motorways (in KM) in EU-15 (Index 1970 = 100)

  6. The result of unbalanced taxation and development: Transport sector is only sector with still increasing CO2 emissions (+20%, 90-99) Change in EU greenhouse gas emissions by sector (1990-1999) Transport sector: 30 % of total CO2 emissions Source: European Environmental Agency

  7. Degree of use > 100% 85-100% 70-84% < 70% The result of unbalanced taxation and development: Planned infrastructure bottlenecks by 2015(NORMAL SCENARIO) Source: Study on “Infrastructure Capacity Reserves for Combined Transport by 2015”, Combined Transport Group (UIC, GTC), May 2004

  8. Re-balancing: Future investment in EU-15 Emphasis on rail for investment in TEN’s Source: PLANCO 2003

  9. Short reminder European Union rail policy objectives The central aim of the 2001 White Paper is to rebalance the modes i.e. shift from road to rail • This is to be achieved by • Prices reflecting all (internal + external) costs • discussion on Eurovignette Directive • most important issue on European transport policy agenda! • Rail market opening/liberalisation • Modern interoperable international rail corridors • improve and extended infrastructure

  10. European rail infrastructure Enormous backlog in investment in both rail Infrastructure and Rolling stock • TEN Priority Projects: • 30 projects, 21 rail related, 5 relevant for CEEC • cost 2007-13: 140 bln Euro • EU budget proposal: • 20 bln Euro TEN-T • + Trans-European Networks 20 bln Euro Cohesion/ERDF for rail + 6 bln Euro ERTMS

  11. Content of this presentation CEEC issues (Re-)Balancing investment in EU transport infrastructure 5 Issues for rail in Central and Eastern Europe South East Europe

  12. Issue 1: Backlog in infrastructure investment EU Cohesion and Regional Development Funds It is vital that national authorities give priority to rail in National Development Plans (NDPs)! Will mistakes made in EU-15 be repeated? Source: PLANCO 2003

  13. Issue 2: Backlog in rolling stock investment Almost the entire rolling stock base in the CEECs is virtually life-expired in technical terms Euro 10 billion investment in traction and passenger rolling stock is needed before 2012, if system failure is to be avoided!

  14. Issue 3: Cross-subsidisation still a common practise Terminating cross subsidisation between freight and passenger operations Joint CER / European Commission conference on Public Service financing, 27 January 2005

  15. Issue 4: Infrastructure access charges Track access charges and financial stability High track access charges can undermine competitive position of rail and cause financial instability

  16. Issue 5: Traffic between EU and its (new) neighbours – the EU “Wider Europe” initiative • South-East-Europe Region • Rail and Road are competing for market share. • Restructuring of rail sector must place rail sector on financially sustainable basis through improved business performance and appropriate budget support mechanisms. • Corridor IV • Upgrading of infrastructure progressing. • Restructuring of rail sector in Romania and Bulgaria based on EU legislation.  • Corridor X • Upgrading of infrastructure stagnant. • Deterioration of transport systems and extra costs resulting from (additional) border crossings place South-East- Europe region at distance from EU. Example: South East Europe Routes

  17. Content of this presentation CEEC issues (Re-)Balancing investment in EU transport infrastructure 5 Issues for rail in Central and Eastern Europe South East Europe

  18. South East Europe: Characteristics: • Dramatically changed geo-political conditions since 1991 hinder road and rail transport. • Freight and passenger flows of equal importance. • Strong competition between road & rail freight. • Restructuring of transport sector and investments aimed at EU integration. • Vast maintenance/investment backlog in both infrastructure and rolling stock. • Wide variation in track access charges. Border procedures and inadequate technical condition of infrastructure and rolling stock erode competitiveness of rail.

  19. South East Europe: Conclusions CEO meeting, Prague, 24 May 2005 • Upgrading of TEN corridors must be accompanied with investment in national networks (modernisation and ‘pruning’). • High level cooperation between States is needed to streamline border crossings. • Restructuring with policy on track access charges must bring financial stability. Difference between SE EU and the rest of CEEC: ‘There is already investment backlog, while work on TEN corridors still has to start’.

  20. South East Europe: What next? At national level: investments and policy measures must take place in parallel ! • Threats: • Investments in upgrading TEN corridors may not delay investments in national networks and RS. • Streamlining border crossings is prerequisite for making rail attractive for customers. • Public obligations on passenger services, track access charges and national network undermine financial stability.

  21. South East Europe: What next? At supra-national level: extra attention and funding from EC, World Bank, EIB and others is needed to: • Elaborate investment funding strategy for the WHOLE rail transport sector in SE-EU and negotiate who does what and when. • Develop a policy on track access charges and (state) budget support instruments. • Develop practical solutions for streamlining border crossings.

  22. Thank you for your attention.

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