Financing the European infrastructure TransEuropean Transport Networks

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Financing the European infrastructure
Trans-European Transport Networks
Milosz Momot TEN -Transport policies
technological development European Commission
EUROPEANCOMMISSION
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Agenda
En-Route to Rails Sustainability
?

• ? Trans-European Transport Network (TEN-T)?
  Financing TEN-T? In search of efficiency and new
  sources of financing

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Trans-European Transport Network - Dimension
Road 95.000 km Rail 107.000 km (incl.30.000
km of HSL) Airports 400 Inland Waterways
13.800 km International Seaports 400 Inland
Ports 300 Traffic Management Systems Highly
relevant to transport in Europe! 40 of the
Community road freight is carried on the TEN road
network. 50 of the Community Rail freight is
carried on the TEN rail network.
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Trans-European Transport Network - TEN-T Railway
network in EIM countries
Source "Implementation report on the TEN-T
guidelines for the period 2004-2005", TINA Vienna
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Trans-European Transport Network - Financing

• Total cost of TEN-T until 2020 600 billion
• Remaining investment for the approved Priority
  Projects ca 270 billion
• In the period 2007-2013 ca 330 billion should
  be invested
• Financing (2007-2013)
• National funding 196 billion (ca 28 billion
  /year)
• TEN-T budget 8 billion for studies, grants,
  instruments
• EIB 52,5 billion in loans earmarked for TEN-T
  projects
• Structural/Cohesion Funds 44 billion for
  TEN-T
• Financing gap! /- 30 billion

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National funding of transport infrastructure

• ? Completion of TEN-T commitment of the Member
  States
• ? TEN-T budget catalyst for starting projects
• ? Investment does not follow the economy growth
• In the 1980s 1,5 of GDP invested in transport
  infrastructure
• Currently
• High differences between MS e.g. Denmark 0,08
  of GDP only, whereas Slovenia on average 1,4 (
  in 1996/1997 even 4,5 of GDP)(Source TINA
  Vienna)
• Trend outside the EU
• China spends 9 of its GDP on infrastructure
• India budgets 3,5 while aiming at 8
• US spends 0,93 only
• (source Report of ErnstYoung, 2007)

Source TINA Vienna
Return to TEN-T Financing
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Financing of TEN-T

• ? Financing gap of ca 30 billion
• ? Delayed delivery of the Priority Projects (only
  6 out 30 PP completed)
• ? New challenges
• climate change - shift to the most
  environmentally friendly modes
• integration of infrastructures of the enlarged
  EU
• sharp increase in demand for mobility.
• ? Investment does not follow the economy growth
• Solution Greater synergy in public investment,
  increased efficiency and mobilisation of
  additional financing sources

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Coordination, efficiency and additional financing

Greater synergy in public investment - better
definition of priorities and co-ordination of
funding ? Better co-ordination between national
and European priorities focus on Priority
Projects ? Increased contribution to the project
of the highest European significance and true
multiannual programming of funds ? Co-ordination
between TEN-T funds and Structural/Cohesion
Funds ? Closer co-operation with the European
Investment Bank ? Tools to help co-ordinate
public funds and actively support projects
(European Coordinators TEN-TEA financial
engineering) Improved efficiency and mobilising
additional financing through co-operation with
private sector (PPP) Framework for charging for
infrastructure use (strategy to internalise
external costs)
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TEN-T Budget 2007-2013
? 2007-2013 budget 8,012 billion ? 80-85
earmarked for priority projects ? Multiannual
programming of financial assistance ? Increased
rate of support (up to 30 for cross-border PP,
50 study) ? Consistent policy - railways
favoured (17 (5) out of 30 PP serve rail) ?
Distribution of funds under multiannual
programming ? In addition 500 million
for ERTMS (2007-2013)
Return to Improved efficiency
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Cohesion/Structural Funds programming
? TEN-T team involved in the programming of the
Cohesion/Structural Funds ? 82 billion for
transport priorities (44 billion for TEN-T) ?
22,5 billion for railway infrastructure ?
Cohesion Fund allocation to TEN-T Priority Project
Source BORegio
Return to Improved efficiency
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Private Public Partnership for TEN-T

• PPP based on appropriate risk sharing, in
  suitable projects may result in efficiency gains
  by providing
• new sources of borrowing bringing infrastructure
  on stream more quickly
• a whole life-cycle approach minimising costs and
  maximising the quality of service
• innovation, alternative management and
  implementation skills.

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PPP support at the EU level

• Prepare the public partner
• Informal PPP exchange DG TREN network
• PPP Central Units - Twinning exercise
• European PPP Expertise Centre (EPEC)
• JASPERS
• Guidelines on PPP in Transport
• Make the PPP environment more favourable
• Public procurement precondition for PPPs
• Eurostat - public accounting rules
• measures/legislative initiatives with side
  effects of stimulating PPPs infrastructure
  charging framework
• Studies (Green Paper on TEN-T policy)
• Adjust the financial aid system to avoid
  exclusion of PPPs
• Facilitating PPP - Move from grants to innovative
  forms of financing

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Green Paper on the TEN-T policy

• ? Green Paper on the TEN-T policy
• open up the dialogue on the TEN-T policy
• take account of key global challenges, in
  particular climate change
• look into more efficient ways of implementing
  the TEN-T
• prepare the grounds for decisions on Community
  funding of the TEN-T
• strengthen the link between the TEN-T and
  relevant transport policy areas
• December 2008 Launching of public debate -
  Presentation to stakeholders
• ? Opportunity to test some PPP and financing
  related questions
• - Options for new PPP specific financial
  instruments under the TEN-T budget
• Options for facilitating the PPP use in the
  railway sector (financial non-financial
  instruments of support for the sector)
• Addressing the problem of high set-up and
  bidding costs of PPP schemes and searching for
  strengthening competition in tendering for
  transport projects

Return to PPP support
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PPP targeting financial instrumentsNew TEN
Regulation

• ? Loan Guarantee Instrument for TEN-T (LGTT)
• Goal Encourage user financing schemes for TEN-T
• Means guarantee issued jointly by the Commission
  and the EIB to mitigate early post-construction
  revenue risk aims at facilitating user
  revenue-based PPP schemes. Assistance until the
  project reaches sufficient traffic level.
• ? Construction cost based grant in the framework
  of availability payment schemes
• Goal Maximisation of the impact of public funds
  while preserving an optimal risk transfer
• Means construction cost based grant (up to 30)
  in favour of Member State(s), to contribute to
  availability payments during the operational
  phase
• ? Risk Capital Facility
• Goal Facilitate setting up TEN projects through
  equity injection
• Means equity provision to investment funds
  investing into TEN projects
• Instrument under redesigning - to be used to
  mitigate the set up risk for PPPs (Seed Capital
  Facility)

Regulation (EC) No 680/2007 of the European
Parliament and of the Council of 20 June 2007
laying down general rules for the granting of
Community financial aid in the field of the
trans-European transport and energy networks
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Thank you for your attention

• For further information
• TREN-homepage
• http//europa.eu.int/comm/dgs/energy_transport/ind
  ex_en.html
• Milosz Momot
• Policy Officer
• TEN-Transport policies technological
  development
• Directorate for Energy and Transport
• Tel [phone]
• Fax [phone]
• milosz.momot_at_ec.europa.eu