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© JSC «High-Speed Rail Lines» Moscow – Saint-Petersburg high-speed rail project (HSR 1) Alex Tourski Deputy director.

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Presentation on theme: "© JSC «High-Speed Rail Lines» Moscow – Saint-Petersburg high-speed rail project (HSR 1) Alex Tourski Deputy director."— Presentation transcript:

1 © JSC «High-Speed Rail Lines» Moscow – Saint-Petersburg high-speed rail project (HSR 1) Alex Tourski Deputy director

2 © JSC «High-Speed Rail Lines» Brief description of the HSR 1 project Main characteristics of the project: Length – 660 km Travel time – 2 hr 30 min Maximum speed up to 400 km per hour Forecast traffic level – 42 pairs of trains per day Forecast traffic – 14 ml people per year Structures – 256 per 72 km Gauge – 1 520 mm Procurement basis – PPP (LCC) CapEx (estimation) – 20 bn Euro Saint-Petersburg Leningrad region Novgorod region Tver region Moscow region HSR 1 Oktyabrskaya line Tver Sheremetyevo Valday Novgorod Pulkovo

3 History of HSR 1 project HSR 1 Saint-Petersburg Oktyabrskaya line Upgrade of the existing line JSC VSM Launch of SAPSAN trains (200 km/h) JSC “High-Speed Rail Lines” (PPP/LCC strategy) JSC “High-Speed Rail Lines” Solution: to build separate dedicated line 1990s 2000s2009 Moscow Solution: to accelerate the existing line

4 Why PPP/LCC in Russia? Standard modelPPP/LCC model Russians have no HSR experience Russian Railways is at huge tech risk Private side takes technological risks. RR does not have to keep tech staff CorruptionHighLow Investments100% from GovExpected 50/50 ratio. Private money are “smart” money Motivation to qualityLowHigh StandardsRussianEuropean Drivers to innovateNONEHIGH Costs controlUnpredictedExpected up to 50%

5 © JSC «High-Speed Rail Lines» "Typical" scheme: step-by-step implementation of the project State Customer Design Acceptance of the Project Object Acceptance of the Object Acceptance of Maintenance Maintenance Request Designer Design Constructor Object Maintenance Organization The designer is not motivated to create the feasible Project The main problems in phases: Customer takes the risk of approving/accepting the Design In case of problems the Constructor would refer to the poor quality of the PDS Customer takes the risk of approving/accepting the Object In case of problems the maintaining organization would accuse constructor and designer The main problem: "responsibility gap"

6 © JSC «High-Speed Rail Lines» Life-Cycle Contract: "No service - no payment" Contract: Term: 30 years (the life cycle of the object) SPV builds the road, bringing their funds itself JSC “RZD” starts an annual payments after the launch of the road The amount of the annual payment is fixed, with changes subject to simple functional requirements: Time on the trip Capacity Safety/Accidents Russian Railways Purchasing Service Special Purpose Vehicle (SPV) Design Construction Maintenance Finance

7 © JSC «High-Speed Rail Lines» Advantages of Life-Cycle Contract LCC is developed worldwide over last 15 years Transfer of technological and planning risks from Government to the Contractor Natural incentive for Contractor to build in time with good quality LCC encourages innovation Private capital attracted Eases the pressure on the budget NB! For the first time the state moves from a cost- based economy to purchasing services

8 Spain UK Finland Netherlands Taiwan Portugal Germany France Development of procurement contracts Terminology: LCC (life cycle contract) is the same as DBFM (design-build- finance-maintain) and almost the same as PFI (Private finance initiative) “Old type” (Design-bid-Build) PPP: Concessions PPP: Life-cycle Contract/DBFM 24.12.09 the minister of transport confirmed that new program on railway development will be based on PPP

9 © JSC «High-Speed Rail Lines» Will Russia benefit from HSR 1? Budget efficiency: RI = 1.97 Cost effectiveness: Et =0.055% Aggregate discounted social benefit: 1.5 billion FYI: After 30 years of HSR operation in France the socio-economic benefit was four times greater than the cost. Billions of roubles State expenditure Budget flows Longer-term budget benefit (after 2050) External project budget elements Internal project budget elements State compensation in line with LCC Capital grant Mobility of population Regional development New investments attraction New jobs National prestige

10 © JSC «High-Speed Rail Lines» HSR / PPP feasibility factors Real market need Government’s full support Legal framework for PPP – The concession law exists, but DBFM implementation requires further improvements Possibility of long-term availability payments Usage of international experience

11 © JSC «High-Speed Rail Lines» Scope of Moscow-St.Petersburg HSR projects stations HSR 1: LCC Transport hub in Moscow Transport hub in St Petersburg Hubs development: Concessions stations

12 Main stages of the project Preparation of the HSR1 business case Stage 1 International conference on HSR 1 in Moscow Short listing Tender process Stage 2 Tender Selection of contractor 30 years 2010 2011 2012 Engineering surveyLand acquisitionA large-scale project for the harmonization of European and Russian standards Securing financing of the project Stage 3 Financial close

13 © JSC «High-Speed Rail Lines» Rolling stock? SPV (Infrastructure provider) JSC «RZD» LCC payments SPV business: HSR 1 line Contract: DBFM Motivation: Payment for quality RZD/Business operator Timetabling and ticket sales Contract: Concession/ Service contract Motivation: Maximum profits Operator (timetable, tickets) Concession payments HSR 1 PPP Scheme State Compensatory subsidies (+ long-term guaranties) and grants

14 © JSC «High-Speed Rail Lines» HSR: a complex mix of components with various life cycles 15-20 years >100 years30-40 years Contractor’s full responsibility for all technical solutions Contractor and State Client’s joint responsibility for technical solutions Signaling Track superstructure Track substructure Division of contracts in the Netherlands (2001): LCC (Design + Build + Maintain + Finance) DB (design + build) Division of contracts in Portugal (2009) and France (2010): LCC (20 yrs) LCC (40 yrs)

15 © JSC «High-Speed Rail Lines» Distribution of risks SPV (Infrastructure provider) State Operator (timetable, tickets) Construction risks Design risks Maintenance risks Environmental risks Safety and security risks Tech Interface implementation risks Regulation and policy risks Demand risk Operation and service risks Political risks Public acceptance risk Network interface risk Inflation and macro risks Financing risks Land and right of way risks Life-cycle costs risk Tech Interface definition risks

16 © JSC «High-Speed Rail Lines» Open tender and transparency in order to attract private money and competition Feedback and suggestions from potential bidders are welcome at early stages but dialogue will be open No sensitive project data will be available until official release on HSR 1 conference in Moscow Decisions on key aspects of the Project will be market tested with industrial experts and potential bidders International best practice on PPP and HSR will be used as a permanent guidance. Market dialogue principles

17 © JSC «High-Speed Rail Lines» Leveraging on the international public knowledge in HSR/PPP Great Britain (Partnerships UK) 19901995200020052010 Netherlands Amsterdam-Brussels France (3 LCC projects) Portugal HSR Lisbon - Madrid

18 © JSC «High-Speed Rail Lines» There are 2 ways to describe products Pole should reflect light with certain efficiency; be safe on impact ; ecologically safe and so on… Material – PVC; height – 1 meter; round in section; reflector – specified size, shape and material; installation – 75 cm above surface and 60 cm deep into the ground ….. Product specification Functional requirements (performance based)

19 © JSC «High-Speed Rail Lines» Conformity test methods Standard Applying rules Functional requirements Standard Functional requirements Product Specifications Conformity test methods 2 different models

20 © JSC «High-Speed Rail Lines» Railroad standards NO HSR standards Civil construction standards Railroad standards HSR standards Civil construction standards ? HSR 1 costs: €20 bln. Expected 10% cost cut => €2 bln HSR 1: Which standards to chose?

21 Future development of HSR lines Tumen HSR 1 HSR 2 Moscow Saint-Petersburg Chelyabinsk Nizniy Tagil Perm Ufa Kazan Nizniy Novgorod Yekaterinburg

22 © JSC «High-Speed Rail Lines» Alex Tourski Deputy Director JSC "High-Speed Rail Lines" Tel: +7 495 660 7870 Cell (RU): +7 985 784 5694 Cell (NL):+31 64 538 8324 Fax: +7 495 660 78 71 Thank You for Your attention!

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