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

© JSC «High-Speed Rail Lines»

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

Alex TourskiDeputy director


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

Tverregion

Moscow

Moscow region

HSR 1

Oktyabrskaya line

Tver

Sheremetyevo

Valday

Novgorod

Pulkovo

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 2000s 2009

Moscow

Solution: to accelerate the existing line

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 Low High

Standards Russian European

Drivers to innovate NONE HIGH

Costs control Unpredicted Expected up to 50%


"Typical" scheme: step-by-step implementation of the project

State Customer

DesignAcceptance of the

Project

ObjectAcceptance of the Object

Acceptance of Maintenance

Maintenance

Request

Designer

DesignConstructor

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"


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


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

•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


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


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


Scope of Moscow-St.Petersburg HSR projects

stations

HSR 1: LCC

Transport hub in Moscow

Transport hub in St Petersburg

Hubs development: Concessions

stations

stations

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

TenderSelection of contractor

30 years

2010 2011 2012

Engineering survey

Land acquisition

A large-scale project for the harmonization of European and Russian standards

•Securing financing of the project

Stage 3

Financial close


Rolling stock?

SPV(Infrastructure

provider)

JSC «RZD»

LCC payments

SPV business: HSR 1 line

Contract: DBFM

Motivation:Payment for quality

RZD/Business operatorTimetabling 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


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)


Distribution of risks

SPV(Infrastructure

provider)State

Operator (timetable, tickets)

Construction risksDesign 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 risksLand and right of

way risks

Life-cycle costs risk

Tech Interface definition risks


• 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


Leveraging on the international public knowledge in HSR/PPP

Great Britain

(Partnerships UK)

1990 1995 2000 2005 2010

Netherlands

Amsterdam-Brussels

France

(3 LCC projects)

Portugal

HSR Lisbon - Madrid


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)


Conformity test methods

Standard

Applying rules


Standard


Product Specifications

Conformity test methods

2 different models


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?

Future development of HSR lines

Tumen

HSR 1

HSR 2

Moscow

Saint-Petersburg

Chelyabinsk

Nizniy TagilPerm

Ufa

Kazan

Nizniy Novgorod

Yekaterinburg


Alex TourskiDeputy Director

JSC "High-Speed Rail Lines"

Tel: +7 495 660 7870Cell (RU): +7 985 784 5694Cell (NL): +31 64 538 8324Fax: +7 495 660 78 71E-mail: [email protected]

Thank You for Your attention!

Documents

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