Railway Regulation in Portugal: Lessons from Experience Maurício Levy A. V. Guimarães da Silva Raúl Vilaça e Moura

Railway Regulation in Railway Regulation in Portugal: Lessons from Portugal: Lessons from

ExperienceExperience

Maurício LevyMaurício Levy

A. V. Guimarães da SilvaA. V. Guimarães da Silva

Raúl Vilaça e MouraRaúl Vilaça e Moura

OutlineOutline

1.1. IntroductionIntroduction

2.2. The evolution of RegulationThe evolution of Regulation

3.3. Regulation applied to railwaysRegulation applied to railways

4.4. The European reform of railways and The European reform of railways and the emergence of Regulatory Bodiesthe emergence of Regulatory Bodies

5.5. The national contextThe national context

6.6. ConclusionsConclusions



1st Package1st Package

1st White Paper1st White PaperTransport PolicyTransport Policy

2nd White Paper2nd White PaperTransport PolicyTransport Policy

White PaperWhite PaperRailwaysRailways

19911991 20052005

19951995 20002000

Dir 91/440Dir 91/440Dir Dir

95/1895/18

Dir 96/48Dir 96/48

Dir 2001/12Dir 2001/12

Dir 2001/16Dir 2001/16

2nd Package2nd Package

3.º Package3.º Package

20012001

Dir Dir 95/1995/19

Dir 2001/13Dir 2001/13

Dir 2001/14Dir 2001/14

Milestones of railway Milestones of railway liberalisationliberalisation

Point ofPoint ofno-returnno-return

Reg 881/2004Reg 881/2004

Dir 2004/49Dir 2004/49

Dir 2004/50Dir 2004/50

Dir 2004/51Dir 2004/51

DL 75/2003DL 75/2003

Reg INTF 21/2005Reg INTF 21/2005Reg INTF 19/2000Reg INTF 19/2000

DL 104/97DL 104/97

DL 299-B/98DL 299-B/98

DL 189-B/99DL 189-B/99 Port 167/2004Port 167/2004DL 270/2003DL 270/2003

Port 168/2004Port 168/2004

DL 252/95DL 252/95DL DL

60/200060/2000

L 88-A/97L 88-A/97


TypesTypesofof

RegulatorsRegulators

Regulatory bodiesRegulatory bodiesof special type and statuteof special type and statuteBanco de Portugal, CNVMBanco de Portugal, CNVM

Independent regulatory bodiesIndependent regulatory bodiesANACOM, ERSEANACOM, ERSE

InstitutesInstitutesINTF, INAC, IPTMINTF, INAC, IPTM


INTF Instituto Nacional do Transporte FerroviárioINTF Instituto Nacional do Transporte Ferroviário ““Railway sector” defined as “all public transport modes Railway sector” defined as “all public transport modes

operating in exclusive guided way” (heavy rail, light rail, operating in exclusive guided way” (heavy rail, light rail, underground, tramway, lifts, aerial cableway)underground, tramway, lifts, aerial cableway)

RegulationRegulation SupervisionSupervision SafetySafety Service quality and passenger rightsService quality and passenger rights Development of railway systemDevelopment of railway system State representation in international State representation in international forafora Pubic service procurement, contract awarding and Pubic service procurement, contract awarding and

supervisionsupervision Government consultancy /supportGovernment consultancy /support ArbitrationArbitration Accident enquiriesAccident enquiries


Sector’s reformSector’s reform

Economic efficiencyEconomic efficiency

Inter-modalityInter-modalityDevelopment andDevelopment and

modernizationmodernization

Consumers rightsConsumers rights

OBJECTIVESOBJECTIVESof INTFof INTF

To promote:To promote:

SafetySafety


In 2001 the government approved a In 2001 the government approved a staff of 80, but never gave staff of 80, but never gave authorization to hire more than half authorization to hire more than half of that numberof that number

The operational budget was about 4 The operational budget was about 4 million Euros (2003), ¾ of INTF’s million Euros (2003), ¾ of INTF’s revenues come from sources other revenues come from sources other than the state budgetthan the state budget


From the set of activities carried out by INTF, From the set of activities carried out by INTF, the following can be highlighted:the following can be highlighted: Regulations (access charging, capacity Regulations (access charging, capacity

allocation, ...)allocation, ...) Directive implementation (interoperability, Directive implementation (interoperability,

cableway, 1st railway package)cableway, 1st railway package) Approval of access chargesApproval of access charges Railway public property (domínio público ferroviário)Railway public property (domínio público ferroviário) Public service concessionsPublic service concessions Accident enquiriesAccident enquiries Cooperation with the Fair Competition AuthorityCooperation with the Fair Competition Authority


Phases of INTF life, before and in the course of our terms of office, Phases of INTF life, before and in the course of our terms of office, 1998 to 2004 (M. Levy 2001-2004, R. Vilaça e Moura 2000-2004, A. 1998 to 2004 (M. Levy 2001-2004, R. Vilaça e Moura 2000-2004, A. V. Guimarães da Silva 1998-2004):V. Guimarães da Silva 1998-2004):

Pre-historic phase, up to 1998, beginning with the creation of three Pre-historic phase, up to 1998, beginning with the creation of three commissions that approached the reform, one dedicated to commissions that approached the reform, one dedicated to regulation; INTF was only created after vertical disintegration regulation; INTF was only created after vertical disintegration (REFER+CP), situation which came to have consequences in its life;(REFER+CP), situation which came to have consequences in its life;

Birth phase, from 1998 to 2001, corresponding to the construction Birth phase, from 1998 to 2001, corresponding to the construction of the global instruments of regulation, characterized by high of the global instruments of regulation, characterized by high transaction costs deriving from litigation;transaction costs deriving from litigation;

Youth phase, from 2001 to 2004, in which important sector Youth phase, from 2001 to 2004, in which important sector structuring acts were approved (implementation of several structuring acts were approved (implementation of several European directives) and the extension of the scope of INTF’s action European directives) and the extension of the scope of INTF’s action to other systems other than heavy rail; restructuring of technical to other systems other than heavy rail; restructuring of technical regulations.regulations.


In the future, twelve principles should be taken into In the future, twelve principles should be taken into account:account:

1.1. The need to continuously invest in the network and its The need to continuously invest in the network and its maintenance, which poses the question of adequate maintenance, which poses the question of adequate funding;funding;

2.2. The need to carry out the financial clearing activities The need to carry out the financial clearing activities known to be necessary and which have not yet seen the known to be necessary and which have not yet seen the light of day;light of day;

3.3. The need for significant improvement in the operational The need for significant improvement in the operational results of the undertakings;results of the undertakings;

4.4. The need to carry out the revision of the incumbent’s The need to carry out the revision of the incumbent’s statutes to bring it to compliance with the model designed statutes to bring it to compliance with the model designed for the sector;for the sector;

5.5. The need to construct a true rail market;The need to construct a true rail market;6.6. The need for the regulator to settle and be able to develop The need for the regulator to settle and be able to develop

in a “non litigational” environment;in a “non litigational” environment;


7.7. The need for stability to create the conditions for The need for stability to create the conditions for attracting private initiative;attracting private initiative;

8.8. The need to assure a critical mass of “know-how”, The need to assure a critical mass of “know-how”, essential for the diffusion of knowledge and innovation;essential for the diffusion of knowledge and innovation;

9.9. The need to think that the ongoing reform calls for The need to think that the ongoing reform calls for attention to the evolution of undertakings but also to the attention to the evolution of undertakings but also to the whole industry and the transparency of this market;whole industry and the transparency of this market;

10.10. The need for a framework for tendering and contract The need for a framework for tendering and contract awarding;awarding;

11.11. The need to cut the high transaction costs that have The need to cut the high transaction costs that have characterized the functioning of regulation;characterized the functioning of regulation;

12.12. The evolution of the regulator’s institutional model calls The evolution of the regulator’s institutional model calls for an analysis. Its “institute statute” appears not to be for an analysis. Its “institute statute” appears not to be adequate.adequate.



1.1. Some of the future challenges are clear and Some of the future challenges are clear and easy to predict:easy to predict:

creation of conditions for attracting private sector creation of conditions for attracting private sector initiative;initiative;

clarification of the State’s different functions as clarification of the State’s different functions as regulator, shareholder and service provider;regulator, shareholder and service provider;

transparency of action and of contract awarding in transparency of action and of contract awarding in public service provision.public service provision.

A critical success factor for all these objectives A critical success factor for all these objectives is the development of the regulatory function is the development of the regulatory function and regulatory bodies, giving them conditions and regulatory bodies, giving them conditions for authority, impartiality and autonomy and, at for authority, impartiality and autonomy and, at the same time, requiring them to meet the same time, requiring them to meet accountability, efficiency and predictability accountability, efficiency and predictability conditions.conditions.


2.2. In Portugal, the reform of the rail system In Portugal, the reform of the rail system effectively started in 1996/1997 and closely effectively started in 1996/1997 and closely followed the construction of the European model. followed the construction of the European model. Yet the timings in the setting up of the Regulator Yet the timings in the setting up of the Regulator Institute and the option of its constitution as Institute and the option of its constitution as Institute did not guarantee optimal conditions for Institute did not guarantee optimal conditions for the establishment of the Regulatory function, the establishment of the Regulatory function, situation which was worsened by erratic situation which was worsened by erratic behaviour of the political powers. This originated behaviour of the political powers. This originated the establishment of a litigation environment in the establishment of a litigation environment in the relations with the regulated bodies that led to the relations with the regulated bodies that led to high transaction costs.high transaction costs.


3.3. It is easy to predict that the future calls for a It is easy to predict that the future calls for a revision of some of the choices made at the revision of some of the choices made at the time the Regulator was founded, if only to time the Regulator was founded, if only to respond to the emergence of new problems respond to the emergence of new problems (like the creation of the Fair Competition (like the creation of the Fair Competition Authority) and the beginning of a new cycle in Authority) and the beginning of a new cycle in the railway reform. It is unfortunate that some the railway reform. It is unfortunate that some opportunities were lost, at least temporarily, opportunities were lost, at least temporarily, by a general reflux of the regulatory function by a general reflux of the regulatory function (diminishing some of the elements that are an (diminishing some of the elements that are an indispensable part of its autonomy). indispensable part of its autonomy).


4.4. The desired evolution of the rail Regulator’s The desired evolution of the rail Regulator’s institutional model calls for an analysis on institutional model calls for an analysis on some of the solutions adopted at the time of some of the solutions adopted at the time of its creation and on which it is worth reflecting its creation and on which it is worth reflecting upon. Its “Institute Statute”, in particular, upon. Its “Institute Statute”, in particular, appears not to be very adequate in making appears not to be very adequate in making him resist, in good conditions and without high him resist, in good conditions and without high internal and external costs, to assaults against internal and external costs, to assaults against its impartiality and autonomy and to material its impartiality and autonomy and to material strangling attempts on its action. On the other strangling attempts on its action. On the other hand, caution is needed when analysing hand, caution is needed when analysing proposals for the fusion of transport regulators proposals for the fusion of transport regulators and some positions that seem to confuse and some positions that seem to confuse governance issues with Regulatory issues.governance issues with Regulatory issues.

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Railway Regulation in Portugal: Lessons from Experience Maurício Levy A. V. Guimarães da Silva Raúl Vilaça e Moura