The need for a long-term-strategy for infrastructure investments
A long-term-strategy for infrastructure investments is needed, particularly today, as the European Union is setting its budgetary envelope and its spending priorities for the next Multiannual Financial Framework (MFF) 2014 – 2020 and, more specifically, the shape and the financing rules for its Trans-European Network for Transport (TEN-T).
First of all, the railway business needs clarity both in terms of sound legislation and in terms of financial commitments. Regarding the latter, the life-cycle of infrastructure projects very rarely coincides with legislative cycles. As a result, infrastructure projects depend on four- or five-year long financial commitments (they last as long as national governments in office) which de facto cannot guarantee the much needed continuity in terms of spending priorities and financial resources.
The seven-year long EU MFF provides a little more room for planning. However, the use of EU funds once again depends not only on the EU political agenda, but also on its interpretation at national level. And we all know that these interpretations can often stir away from the original intentions.
This problem is particularly visible when it comes to Central and Eastern European Member States. The speed of ministerial and governmental turnover is much higher than in the EU-15, and this has an almost direct correlation with the speed of the managerial turnover in national rail companies. This must be corrected as soon as possible if we don’t want to see either a growing gap in the quality of infrastructure between the old and new member states or a European Union where railways do business only at the margins of the transport market.
This is why we need national infrastructure transport funds as well as a European fund which can earmark resources for transport in general, and rail in particular. This must happen in a manner which is consistent with the pace at which projects are developed and implemented. On top of this, there should be an adequate balance of investments between road and rail infrastructure. And eventually it is important to proceed towards a full and mandatory internalisation of external costs in order to achieve the level playing field between transport modes, as demanded by the European Commission Transport White Paper in 2011.
The European Commission proposal for TEN-T sees Central and Eastern Europe being crossed by a number of corridors which are eligible for funding, provided that they respect all criteria listed in the TEN-T Guidelines proposal. Corridor 10, for example, will connect Strasbourg (France) to Constanta via Frankfurt, Wien and Bucharest. Corridor 4 will connect Hamburg to the Turkish border via Berlin, Prague, Bratislava, Budapest, Sofia and Thessaloniki. Corridor 3 will connect Algeciras (Spain) with the Ukrainian border via Madrid, Barcelona, Lyon, Turin, Ljubljana and Budapest.
If this masterplan is to become reality in the foreseeable future, then funding policies committing resources to these corridors are needed. The EU must be strong enough to keep these resources available as independently as possible from the outcomes of national political elections.
Technical barriers on the EU network
The investments in rail infrastructure can only represent a European added value if interoperability across Europe is assured, granting all operators the possibility to operate their trains on the whole EU network. This is why an important share of investments should be dedicated to further developing technological interoperability, both trackside and on-board, in particular technical specifications for interoperability (TSI) of infrastructure (INF), energy (ENE), telematic applications for passengers (TAP) and telematic applications for freight (TAF) as well as ERTMS. CER together with the European Commission and a number of stakeholders is supporting this approach.
The European Commission aims to increasing the share of rail freight to 80% by 2050. In order to achieve this and in the context of the TEN-T revision, the Commission proposes to allow trains of a standard length to run on TEN-T corridors as well as axle loads which should go up to 22.5 tones. Longer trains and increased axle loads are certainly part of the solution, but these measures must go together with sound investments aimed at removing network bottlenecks and at increasing network capacity and interoperability.
Only the pursuit of these goals all together can drastically improve the efficiency of the rail system and attract more passenger and freight traffic on rail tracks.
Treatment of revenue-generating operations also in the context of the EC proposals
We do not only need longer-term financial commitments or investments in technology. Another important way of allocating additional resources is to apply equitable financial rules at a time when EU fund spending is at stake.
In the EU, 41.4% of the motorway network is fully publicly subsidized for its maintenance and development. This is the reason why no tolls are applied to the users of such infrastructure. On the contrary, rail infrastructure managers are obliged by EU legislation1 to establish a charging framework for the use of their whole infrastructure, i.e. increasing the railways’ competitive burden vis à vis the road sector.
When it comes to regional policy, the proposal for the Regulation laying down common provisions for the Structural Funds 2 (art. 54) states that, for investments in infrastructure, “the eligible expenditure on revenue-generating projects shall not exceed the current value of the investment cost of the operation less the current value of the net revenue” over a specific reference period. As rail infrastructure must always levy charges, all rail infrastructure projects are then considered as revenue-generating projects. Therefore, the current value of the expected revenues shall be deducted from the total eligible costs of the rail project.
Taking this into account when comparing two projects of the same size, it is clear that the one which generates revenues will have a smaller funding gap than the one not generating revenues: any given co-financing rate applied to a smaller funding gap will result in absolute terms in a smaller financial envelope. In a way, (i) the less the project is subsidized with national budgets’ money the more the project manager will have to raise revenues from the users. As a consequence, (ii) the more the revenues are coming from the users the smaller will be the funding gap. And (iii) the smaller the funding gap the less will be the absolute EU co-financing. Shortening down the chains of causes and effects, we can then well reach the paradoxical conclusion that the less the project is subsidized with national budgets’ money, the less will be the absolute EU co-financing – like for rail infrastructure projects; at the same time this same mechanism rewards more subsidized projects with even more EU co-financing – like non tolled motorways.
Unfortunately, discussions of the legislative proposals in the Council seem to take a different direction. The concept has not been widely accepted by the Parliament either, but there is still room for railways represented through CER to continuing its fight for a fairer treatment of EU-funded rail projects.
The way ahead
In complete consistency with the European Commission Transport White Paper, CER will be closely working with all relevant stakeholders to create a political environment supporting the following three pillars: (i) improving the policy of infrastructure funding, (ii) improving infrastructure capacity and (iii) setting a level playing field between different modes of transport.
It is not an easy task, but we are confident that European and national institutions will have to come to terms with the fact that railways represent a cornerstone of the European logistic chains of the present – and even more of the future ones.
Share on:
