Guidelines concerning Regulation 1370/2007 on public passenger transport services by rail and by road, adopted in March, provide clarity on important topics for the operation of the domestic market such as the definition of public service obligations, the duration of public service contracts, the conditions of competitive and direct awards of public service contracts, but also the rules on compensating public service obligations.
In the Communication on interpretative guidelines concerning Regulation (EC) No 1370/2007, the Commission presents its own interpretation of specific provisions of the Regulation based on good practices to help member states to fully benefit from the advantages provided by the domestic market.
Most often, but not always, public service obligations can refer to the requirements imposed to the public service operator regarding, for instance, the frequency of services, their quality, the provision of services especially in intermediary smaller stations which might not be commercially attractive, as well as the provision of trains early in the morning and late at night. For example (illustrative), the Commission considers that the services classified as public services have to be dedicated to citizens or in the interest of society as a whole. Competent authorities define the nature and the scope of public service obligations while observing the principles generated by the treaty. In order to meet the objectives of the regulation, namely providing safe, profitable and high-quality passenger transport services, competent authorities have to make their best to supply these services in a sustainable manner, both economically and financially. When concluding public service obligations, both parties in the contract expect that their rights would be observed and have to meet their contractual obligations. These rights and obligations include the financial rights and obligations.
The geographical scope of public service obligations should enable competent authorities to optimize the economic aspects of the public transport services exploited under their responsibility, including, where appropriate, local, regional and subnational network effects. Network effects permit the profitable supply of public transport services, due to the mutual financing between profitable and non-profitable services. In turn, this should permit authorities to meet the objectives set by the transport policy, while ensuring, where applicable, the conditions for real and loyal competition in the network, for example, by opening the market for certain high-speed services.
As recital 15 of Regulation (EC) No 1370/2007 underlines, “contracts of long duration can lead to market foreclosure for a longer period than is necessary, thus diminishing the benefits of competitive pressure. In order to minimise distortions of competition, while protecting the quality of services, public service contracts should be of limited duration”.
Additionally, in the case of very long contract durations it becomes difficult to correctly attribute risks between the operator and the authority due to increasing uncertainties. On the other hand, recital 15 explains that “it is necessary to make provision for extending public service contracts by a maximum of half their initial duration where the public service operator must invest in assets for which the depreciation period is exceptional and, because of their special characteristics and constraints, in the case of the outermost regions”, the European Commission states in the recently published Communication.
The Commission also says that “any decision about extending the duration of a public service contract by 50 % should be subject to the following considerations: the public service contract must oblige the operator to invest in assets such as rolling stock, maintenance facilities or infrastructure for which the depreciation period is exceptionally long”.
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[ by Elena Ilie ]Share on:
