Public Budget Contributions to the European Rail Sector filePublic Budget Contributions to the European Rail Sector Introduction Introduction Public Budget Contributions are one of

Public Budget Contributions to the European Rail Sector

Public Budget Contributions to the European Rail

Sector

Jan Thomas Schafer, M.A.

Justus-Liebig-University Giessen

Workshop on Financing and Performance

May 11, 2017

Jan Thomas Schafer, M.A. Workshop on Financing and Performance, May 11, 2017 1 / 23


Introduction

Introduction

Public Budget Contributions are one of the main funding

sources of the European railway sector

Detailed information on the level and use of funds is typically

not available in easily accessible, systematic and well

structured form

We have updated and expanded the well-known database of

Nera (2004, 2005) for 8 Countries

Data is used to compare the structure of contributions as well

as to identify differences in the applied financing models that

might be likely to influence the performance of the sector



Public Budget Contributions to Railways: Case Studies on 8 European Countries

1 Introduction

2 Public Budget Contributions to Railways: Case Studies on 8

European Countries

3 Financing of Infrastructure Management and Transport

Operations

4 Financing of Infrastructure Investments

5 Conclusion

6 Appendix




Development and Breakdown of Public Budget Contributions 2001-2015 in millions

of PPP adjusted Euro

05,

000

10,0

0015

,000

20,0

00

SwitzerlandSwedenSpainNorwayItalyGermanyGBFrance

2015

2014

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2015

2014

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2015

2014

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2015

2014

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2015

2014

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2015

2014

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2015

2014

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2015

2014

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

Infr

astr

uctu

re r

even

ue c

ontr

ibut

ion

Infr

astr

uctu

re in

vest

men

t con

trib

utio

nP

ublic

ser

vice

com

pens

atio

n (P

SC

)R

ollin

g st

ock

inve

stm

ent c

ontr

ibut

ion

Pen

sion

obl

igat

ions

Deb

t Ser

vice

, deb

t red

uctio

n an

d ca

pita

l inj

ectio

nsO

blig

atio

ns r

elat

ed to

the

rest

ruct

urin

gO

ther




Public Budget Contributions for infrastructure investments, operation, PSC and

investments in rolling stock in ePPP per ptkm

0.02

0.04

0.06

0.08

0.10

0.12

0.14

0.16

0.18

0.20

0.22

PP

P a

djus

ted

Eur

o pe

r pt

km

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

France GB Germany ItalyNorway Spain Sweden Switzerland




Public Budget Contributions for infrastructure investments, operation, PSC and

investments in rolling stock in ePPP per inhabitant

0

50

100

150

200

250

300

350

PP

P a

djus

ted

Eur

o pe

r in

habi

tant

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015




Financing of Infrastructure Management and Transport Operations

Introduction

1 Introduction


European Countries


Operations


5 Conclusion

6 Appendix




Introduction

Introduction

Main sources of funds: market revenue, revenue from access

charges as well as PSC or revenue contributions

Tendency to mainly three financing models:1 Focus on financing of infrastructure management2 Focus on financing of public services3 ’Hybrid’-like financing approach

Substitution effect

Financing model 1 implies lower network charges and thus a

lower amount of necessary Public Service Compensation

Financing model 2 implies a higher degree of cost coverage of

access charges and thus lower operating contributions that

need to be paid to the infrastructure manager




Ratio Analysis

Ratio of PSC and infrastructure revenue contribution in 2014

France

GB

Germany

Italy

Norway

Spain

Sweden

Switzerland

0.00

0.02

0.04

0.06

0.08

Pub

lic S

ervi

ce C

ompe

nsat

ion

in P

PP

adj

uste

d E

uro

per

pkm

0.00 0.02 0.04 0.06 0.08Infrastructure Revenue Contribution

in PPP adjusted Euro per ptkm




Ratio Analysis

Share of infrastructure operating cost covered by access charges 2001-2014 in

percent

0

10

20

30

40

50

60

70

80

90

100

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014





Ratio Analysis

Rail Usage Intensity in pkm per inhabitant

France

GBGermany

Italy

Norway

Spain

Sweden

Switzerland

500.00

1000.00

1500.00

2000.00

2500.00

Rai

l Usa

ge In

tens

ity in

pkm

per

inha

bita

nt

0.00 0.20 0.40 0.60 0.80 1.00Focus of Public Budget Contributions(0.00 Focus on Transport Operations,

1.00 Focus on Infrastructure Management)




Ratio Analysis

Rail Usage Intensity in ptkm per inhabitant

France

GB

Germany

Italy

Norway

Spain

Sweden

Switzerland

1000.00

2000.00

3000.00

4000.00

Rai

l Usa

ge In

tens

ity in

ptk

m p

er in

habi

tant






Ratio Analysis

Network Utilization in ptkm per kilometer of the network

France

GBGermany

Italy

Norway

Spain

Sweden

Switzerland

2.0e+06

4.0e+06

6.0e+06

8.0e+06

1.0e+07

Net

wor

k U

tiliz

atio

n in

ptk

m/k

m






Ratio Analysis

Modal Share of Passenger Transport

FranceGBGermany

Italy

Norway

Spain

Sweden

Switzerland

5.00

10.00

15.00

20.00

Mod

al s

plit

of p

asse

nger

tran

spor

t






Ratio Analysis

Modal Share of Freight Transport

FranceGB

Germany

Italy Norway

Spain

Sweden

Switzerland

0.00

10.00

20.00

30.00

40.00

50.00

Mod

al s

plit

of fr

eigh

t tra

nspo

rt






Ratio Analysis

Breakdown of Public Budget Contributions 2001-2015 in percent of Total

Contributions for infrastructure investments, operation, PSC and investments in

rolling stock

050

100

perc

ent

SwitzerlandSwedenSpainNorwayItalyGermanyGBFrance

2015

2014

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2015

2014

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2015

2014

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2015

2014

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2015

2014

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2015

2014

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2015

2014

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2015

2014

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

Infr

astr

uctu

re r

even

ue c

ontr

ibut

ion

Infr

astr

uctu

re in

vest

men

t con

trib

utio

nP

ublic

ser

vice

com

pens

atio

n (P

SC

)R

ollin

g st

ock

inve

stm

ent c

ontr

ibut

ion



Financing of Infrastructure Investments

1 Introduction


European Countries


Operations


5 Conclusion

6 Appendix




Introduction

Main sources of funds: Investment contributions, debt

instruments (Bonds, loans), equity, project finance (PPPs)

Tendency to two approaches1 Government Contributions2 Funds of the infrastructure manager (involves issuing debt)

Some infrastructure managers are compensated for the

additional burden of financing debt while other IM need to

cover expenses from network charges and public contributions

Degree of government funding is observable in the amount of

debt issued by infrastructure managers

Infrastructure managers that carry a large amount of debt

must bear higher interest burdens




Infrastructure investment contribution 2001-2015 in ePPP per inhabitant

0.00

50.00

100.00

150.00

200.00

250.00

PP

P a

djus

ted

Eur

o pe

r in

habi

tant

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015





Non-Current liabilities of main infrastructure managers 2001-2015 in million PPP

adjusted Euro

0

20,000

40,000

60,000

80,000

PP

P a

djus

ted

Eur

o

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015





Debt service, debt reduction and capital injections 2001-2015 in million PPP

adjusted Euro

0

2,000

4,000

6,000

8,000

10,000

12,000

PP

P a

djus

ted

Eur

o

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015




Conclusion

Conclusion

All countries support their national railway sector by means of

different types of contributions

Large differences in the level of government contributionsThe focus of government contributions for infrastructuremanagement and transport operations differs

Tendency towards three financing models

Cost recovery ratios differ accordingly

Which financing model is advantageous, remains unclear

Different approaches for infrastructure financing that might

influence the IMs performance

When setting access charges it is crucial to review the general

level of public contributions to the whole rail sector

It seems important to ensure future-proof financing of sector

expenditures (sustainable debt levels of IMs, etc.)



Appendix

Public Services

1 Introduction


European Countries


Operations


5 Conclusion

6 Appendix



Appendix

Public Services

Public Service Compensation 2001-2015 in ePPP per pkm

−0.01

0.00

0.01

0.02

0.03

0.04

0.05

0.06

0.07

0.08

PP

P a

djus

ted

Eur

o pe

r pk

m

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015




Appendix

Public Services

Public Service Compensation 2001-2015 in ePPP per inhabitant

−0.01

0.00

0.01

0.02

0.03

0.04

0.05

0.06

0.07

0.08

PP

P a

djus

ted

Eur

o pe

r pk

m

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015




Appendix

Infrastructure Management

Infrastructure revenue contribution 2001-2015 in ePPP per ptkm

0.00

0.01

0.02

0.03

0.04

0.05

0.06

0.07

0.08

PP

P a

djus

ted

Eur

o pe

r pt

km

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015




Appendix

Infrastructure Management

Infrastructure revenue contribution 2001-2015 in ePPP per inhabitant

0

20

40

60

80

100

120

PP

P a

djus

ted

Eur

o pe

r in

habi

tant

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015



Documents

Public Budget Contributions to the European Rail Sector filePublic Budget Contributions to the European Rail Sector Introduction Introduction Public Budget Contributions are one of