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Moscow – Saint-Petersburg high-speed rail project (HSR 1)

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Presentation on theme: "Moscow – Saint-Petersburg high-speed rail project (HSR 1)"— Presentation transcript:

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

2 Brief description of the HSR 1 project
Saint-Petersburg Leningrad region Novgorod region Tver Moscow HSR 1 Oktyabrskaya line Sheremetyevo Valday Pulkovo 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 – mm Procurement basis – PPP (LCC) CapEx (estimation) – 20 bn Euro © JSC «High-Speed Rail Lines»

3 Upgrade of the existing line
History of HSR 1 project Saint-Petersburg HSR 1 Oktyabrskaya line Moscow Solution: to accelerate the existing line Upgrade of the existing line Launch of SAPSAN trains (200 km/h) Solution: to build separate dedicated line JSC “High-Speed Rail Lines” (PPP/LCC strategy) JSC VSM JSC “High-Speed Rail Lines” 1990s 2000s 2009

4 Why PPP/LCC in Russia? Standard model PPP/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 Corruption High Low Investments 100% from Gov Expected 50/50 ratio. Private money are “smart” money Motivation to quality Standards Russian European Drivers to innovate NONE HIGH Costs control Unpredicted Expected up to 50%

5 "Typical" scheme: step-by-step implementation of the project
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 State Customer Request Designer Design Acceptance of the Project Design Constructor Object Acceptance of the Object Мы рассказываем эту схему не потому что ее не знают на западе, а только для того, чтобы продемонстрировать как мы понимаем термин КЖЦ/LCC. Иначе есть риск, что мы говорим на разных языках, используя формально один и тот же термин Object Maintenance Organization Acceptance of Maintenance Maintenance The main problem: "responsibility gap" © JSC «High-Speed Rail Lines»

6 Life-Cycle Contract: "No service - no payment"
Russian Railways 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 Special Purpose Vehicle (SPV) Design Purchasing Service Construction Maintenance Finance © JSC «High-Speed Rail Lines»

7 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 © JSC «High-Speed Rail Lines»

8 Development of procurement contracts
“Old type” (Design-bid-Build) PPP: Life-cycle Contract/DBFM PPP: Concessions Germany France the minister of transport confirmed that new program on railway development will be based on PPP UK Finland Netherlands Taiwan Portugal Spain Очень важно подчеркнуть, что это – наше понимание картины мира. И нам было бы интересно получить мнение коллег по цеху Terminology: LCC (life cycle contract) is the same as DBFM (design-build- finance-maintain) and almost the same as PFI (Private finance initiative)

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

10 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 © JSC «High-Speed Rail Lines»

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

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

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

14 HSR: a complex mix of components with various life cycles
Division of contracts in Portugal (2009) and France (2010): LCC (20 yrs) LCC (40 yrs) Contractor’s full responsibility for all technical solutions Contractor and State Client’s joint responsibility for technical solutions Division of contracts in the Netherlands (2001): LCC (Design + Build + Maintain + Finance) DB (design + build) Signaling Track superstructure Track substructure 15-20 years 30-40 years >100 years © JSC «High-Speed Rail Lines»

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

16 Market dialogue principles
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. © JSC «High-Speed Rail Lines»

17 Leveraging on the international public knowledge in HSR/PPP
Great Britain (Partnerships UK) Netherlands Amsterdam-Brussels Portugal HSR Lisbon - Madrid France (3 LCC projects) 1990 1995 2000 2005 2010 © JSC «High-Speed Rail Lines»

18 There are 2 ways to describe products
Functional requirements (performance based) Pole should reflect light with certain efficiency; be safe on impact ; ecologically safe and so on… Product specification 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 ….. © JSC «High-Speed Rail Lines»

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

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

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

22 Thank You for Your attention!
Alex Tourski Deputy Director JSC "High-Speed Rail Lines" Tel: Cell (RU): Cell (NL): Fax: © JSC «High-Speed Rail Lines»


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