TransportTransport

State of Play and Preliminary Findings of the ERTMS Study to develop innovative solutions to

the financing of ERTMS

Stéphane Ouaki, Head of Unit Connecting Europe – Investment Strategy

TEN-T Days 201522 June 2015

TransportTransport

Estimating EU's infrastructure investment needs

Overall: €1.5 - 2 trn by 2020 to meet the policy goals of the

Europe 2020 Strategy for smart, sustainable and inclusive growth

Transport alone: €500 bn on TEN-T alone by 2020

Scarce resources for railways: EC identified a pipeline of 1208

rail projects requiring investments of €430 bn by 2030

This is in stark contrast with €24 bn available under CEF for

Transport sector after €2.2 bn contribution of CEF budget to EFSI

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Limited scope of EU grants available

6-fold oversubscription for ERTMS investments under 2014 CEF

Call for proposals: request for €1.1 bn out of available €200 M

Full deployment of ERTMS on the TEN-T core and comprehensive

networks is binding by 2030 and 2050

CEF grants - insufficient. How to make the most out of the

limited funding available?

Innovative financing offered by CEF is part of the solution

TransportTransport

Study on innovative financing of ERTMS

Objective: the development of market based financial solutions to

complement the use of CEF grants

How: development of realistic business models and schemes

to attract private finance to support the deployment of ERTMS:

1. On the ground, through PPP structures

2. On board, via national schemes in place at MSs level

3. On board and on the ground, defining TEN-T Corridor- specific business models

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Stakeholder engagement: market analysis

Infrastructure Managers Railway UndertakingsMember States

Survey

Interview

Survey

Interview/ dedicated workshop / meeting

Survey

Interview/ dedicated workshop / meeting

Additional interviews foreseen

+

Financial institutions

Manufacturers

Leasing companies

Rail Associations

> 60 stakeholders

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Forms of potential EU financial solutions

LGTT v2.0New guarantee covers all types of project risks for the whole life cycle of the project

'Swedish' SPV model for RUs

SPV provides grants for retrofitting rolling stock and receives revenues from a small increase in TACs that RUs pay to IMs

PPP + DTAC model for IMs

PPP provides grants to IMs for installing ERTMS trackside and receives revenues from a mark-up from RUs' increased international revenues as well as from DTACs that non-ERTMS compliant RUs pay to IMs

PPP schemesPPPs have proven to be effective on several occasions and could be further used with the EU support (e.g. through the LGTT v2.0 or contributing with grants)

Joint procurementFollowing the Danish example, joint procurement at national level can be leveraged to reduce unit costs and to support smaller operators with limited access to finance

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Corridor-level analysis

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FR

IT

SI

HR

HU

Scope: analysis of business cases to map how / when / where EU financial support or country level schemes could support ERTMS deployment

Critical issues - timely coordination at all levels: between on-board and trackside implementation; within and across different countries and stakeholders involved; identification of mutual incentives for both trackside and on-board implementation

Corridor features: ERTMS deployment is impacted by the complexity, multiplicity and diversity of Corridor nature, the presence of bottlenecks affecting the benefits to be achieved, the different traffic flows on Corridor sections and alike

Drivers for business case: ERTMS trackside costs, capacity investments that could be avoided thanks to ERTMS deployment, costs to replace/renew the legacy systems, ERTMS on-board costs for vehicles using the Corridor, ERTMS-related benefits and savings

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Next Steps

•Continued development of financial instruments / schemes

•Oct 2015 - presentation of final outcomes of the Study

•Concrete project identification for the EIB to work on

We hope that you to come with good projects to utilise innovative

financing instruments / schemes

Thank you