1. CER - 2005 The Voice of European Railways CER view on South East Europe: Balanced investment and financial stability Zagreb, 17 June 2005 Ad Toet Advisor Central and Eastern European Countries Community of European Railway and Infrastructure Companies, CER

2. CER - 2005 The Voice of European Railways  The CER brings together 44 railway companies and infrastructure managers from the EU Member States, the EU accession countries Norway, Croatia, Serbia/Montenegro, Bosnia/Herzegovina and Switzerland  The CER deals with all policy areas of significance to railway transport  The CER offers advice and recommendations to policy makers in Brussels  The CER works in close collaboration with the Paris-based UIC CER – Community of European Railway and Infrastructure Companies

3. CER - 2005 The Voice of European Railways CEEC issues Content of this presentation 5 Issues for rail in Central and Eastern Europe South East Europe (Re-)Balancing investment in EU transport infrastructure

4. CER - 2005 The Voice of European Railways Unbalanced taxation between transport modes – Taxes vs. environmental damage Source: ECMT (2003), CER (1)Rail is significantly less environmentally damaging (2)Road taxes less than environmental damage; rail taxes more than environmental damage Environmental damage in Euros per thousand ton-km Taxes on operations in Euros per thousand ton-km (rail) (road)

5. CER - 2005 The Voice of European Railways Unbalanced development Railway Lines and Motorways (in KM) in EU-15 (Index 1970 = 100) HighwaysRail High Speed Lines 199040.000 km900 km 200050.000 km3.000 km 201070.000 km6.000 km

6. CER - 2005 The Voice of European Railways The result of unbalanced taxation and development: Source: European Environmental Agency Change in EU greenhouse gas emissions by sector (1990-1999) Transport sector: 30 % of total CO2 emissions Transport sector is only sector with still increasing CO 2 emissions (+20%, 90-99)

7. CER - 2005 The Voice of European Railways Planned infrastructure bottlenecks by 2015 (NORMAL SCENARIO) > 100% 85-100% 70-84% < 70% Degree of use Source: Study on “Infrastructure Capacity Reserves for Combined Transport by 2015”, Combined Transport Group (UIC, GTC), May 2004 The result of unbalanced taxation and development:

8. CER - 2005 The Voice of European Railways Re-balancing: Future investment in EU-15 Source: PLANCO 2003 Emphasis on rail for investment in TEN’s

9. CER - 2005 The Voice of European Railways Short reminder European Union rail policy objectives The central aim of the 2001 White Paper is to rebalance the modes i.e. shift from road to rail This is to be achieved by 1.Prices reflecting all (internal + external) costs  discussion on Eurovignette Directive  most important issue on European transport policy agenda! 2.Rail market opening/liberalisation 3.Modern interoperable international rail corridors  improve and extended infrastructure

10. CER - 2005 The Voice of European Railways European rail infrastructure Enormous backlog in investment in both rail Infrastructure and Rolling stock Trans-European Networks TEN Priority Projects: 30 projects, 21 rail related, 5 relevant for CEEC cost 2007-13: 140 bln Euro EU budget proposal: 20 bln Euro TEN-T + 20 bln Euro Cohesion/ERDF for rail + 6 bln Euro ERTMS

11. CER - 2005 The Voice of European Railways CEEC issues Content of this presentation 5 Issues for rail in Central and Eastern Europe South East Europe (Re-)Balancing investment in EU transport infrastructure

12. CER - 2005 The Voice of European Railways Issue 1: Backlog in infrastructure investment Source: PLANCO 2003 It is vital that national authorities give priority to rail in National Development Plans (NDPs)! Will mistakes made in EU-15 be repeated? EU Cohesion and Regional Development Funds

13. CER - 2005 The Voice of European Railways Almost the entire rolling stock base in the CEECs is virtually life-expired in technical terms Total CEECs less than 10 years old 10 to 20 years old 20 years and older locomotives 290191210262 Electric and Diesel Motor units (EMU/DMUs) 2333142958 passenger coaches 121938298253 freight wagons 444274664165401 Euro 10 billion investment in traction and passenger rolling stock is needed before 2012, if system failure is to be avoided! Issue 2: Backlog in rolling stock investment

14. CER - 2005 The Voice of European Railways Joint CER / European Commission conference on Public Service financing, 27 January 2005 Issue 3: Cross-subsidisation still a common practise Terminating cross subsidisation between freight and passenger operations

15. CER - 2005 The Voice of European Railways Track access charges and financial stability Issue 4: Infrastructure access charges High track access charges can undermine competitive position of rail and cause financial instability

16. CER - 2005 The Voice of European Railways Example: South East Europe Routes Corridor X Upgrading of infrastructure stagnant. Deterioration of transport systems and extra costs resulting from (additional) border crossings place South-East- Europe region at distance from EU. Corridor IV Upgrading of infrastructure progressing. Restructuring of rail sector in Romania and Bulgaria based on EU legislation. South-East-Europe Region Rail and Road are competing for market share. Restructuring of rail sector must place rail sector on financially sustainable basis through improved business performance and appropriate budget support mechanisms. Issue 5: Traffic between EU and its (new) neighbours – the EU “Wider Europe” initiative

17. CER - 2005 The Voice of European Railways CEEC issues Content of this presentation South East Europe 5 Issues for rail in Central and Eastern Europe (Re-)Balancing investment in EU transport infrastructure

18. CER - 2005 The Voice of European Railways Dramatically changed geo-political conditions since 1991 hinder road and rail transport. Freight and passenger flows of equal importance. Strong competition between road & rail freight. Restructuring of transport sector and investments aimed at EU integration. Vast maintenance/investment backlog in both infrastructure and rolling stock. Wide variation in track access charges. South East Europe: Characteristics: Border procedures and inadequate technical condition of infrastructure and rolling stock erode competitiveness of rail.

19. CER - 2005 The Voice of European Railways Upgrading of TEN corridors must be accompanied with investment in national networks (modernisation and ‘pruning’). High level cooperation between States is needed to streamline border crossings. Restructuring with policy on track access charges must bring financial stability. South East Europe: Conclusions CEO meeting, Prague, 24 May 2005 Difference between SE EU and the rest of CEEC: ‘There is already investment backlog, while work on TEN corridors still has to start’.

20. CER - 2005 The Voice of European Railways At national level: investments and policy measures must take place in parallel ! South East Europe:What next? Threats: Investments in upgrading TEN corridors may not delay investments in national networks and RS. Streamlining border crossings is prerequisite for making rail attractive for customers. Public obligations on passenger services, track access charges and national network undermine financial stability.

21. CER - 2005 The Voice of European Railways At supra-national level: extra attention and funding from EC, World Bank, EIB and others is needed to: South East Europe: What next? 1.Elaborate investment funding strategy for the WHOLE rail transport sector in SE-EU and negotiate who does what and when. 2.Develop a policy on track access charges and (state) budget support instruments. 3.Develop practical solutions for streamlining border crossings.

22. CER - 2005 The Voice of European Railways Thank you for your attention.