Portuguese high-speed network is fast approaching

RAVE is a company that develops and co-ordinates the projects and studies that are necessary to facilitate decision-making in the context of planning, constructing, financing and operating a high-speed rail network that is to be established in continental Portugal along with its planned connections to the high-speed railway network in Spain.

RAVE was founded in 2000 with a corporate capital of €2,500,000, which was wholly subscribed by its two shareholders, the Portuguese State and REFER – the Portuguese national railway system.

In addition to its activities in Portugal, in partnership with ADIF – a Spanish Railway Infrastructure Management company, RAVE is a 50% shareholder in AVEP – Alta Velocidade Espanha-Portugal [High Speed Spain-Portugal], a European economic interest grouping created in order to study rail links between the two countries. AVEP is responsible for co-ordinating market research studies and defining routes and other technical aspects of the trans-crossing sections of this railway system, and also co-ordinates applications and procedures for obtaining EU funding for the project.

The project for the establishment of a high-speed rail network in Portugal is an integral part of the Trans-European Rail Transport Network. The planned high-speed network will connect the main centres for passenger and cargo transport in the Iberian Peninsula.

The project essentially consists of a Coastal Corridor between Galicia and Lisbon that will articulate with other rail connections: one rail link to the North, towards Salamanca and Bordeaux, and another link to the South, towards Évora, Elvas/Badajoz – Madrid – Barcelona – Marseille. An additional link is also being planned to connect Évora to Faro/Huelva. The geographic area between Lisbon, Oporto and Madrid has about 17 millions inhabitants representing the three cities around 60% of total.

The introduction of high-speed rail axis Lisbon-Oporto and Lisbon-Madrid is expected to increase the market share of rail from 11% in 2003 to 36% in 2030. Passengers demand is foreseen to rise to 21.5 million/year in 2030.

In addition to being a modern and efficient transport system, the project will constitute:

• An element that will ensure Portugal’s integration with the Iberian Peninsula and Europe
• A boost to transport services and regional development
• A reaffirmation of the Atlantic seaboard as a competitive region on an European scale
• A factor that will be an environmental asset for Portugal
• A sustainable project that will dynamise employment and economic and technological development

The configuration of the high-speed rail network for the 21st century was defined at the 2003 Iberian Summit and in Resolution No. 83/2004, of 26 June 2004, by the Council of Ministers. The project is to be developed along five main routes: Lisbon-Oporto, Lisbon-Madrid, Oporto-Vigo, Aveiro-Salamanca and Faro-Huelva.

The Lisbon-Madrid and Oporto-Vigo high-speed links (which will be functional in 2013) and the Lisbon-Oporto route (operational in 2015) have been deemed to be priority routes by the Portuguese government, the characteristics of which are presented in the table below.

The Lisbon-Oporto route

The high-speed rail link between Lisbon and Oporto will connect Portugal’s two main cities and will also serve some other important mid-sized urban centres (Coimbra, Aveiro and Leiria). The route will include high-speed stations in Lisbon, Ota (to serve Lisbon’s planned future airport), Coimbra, Aveiro and Oporto (Campanhã).

The railway line will enter Oporto over the São João Bridge and will enter Lisbon from the right bank of the River Tagus.
This line has a potential demand of 12.2 million passengers and will constitute a viable alternative to the air connections between these two cities and the A1 National Motorway. In addition, it will free up capacity on conventional railway lines for regional and suburban passenger and cargo traffic.

The Lisbon-Madrid route

The high-speed railway link between Lisbon and Madrid will connect the two capitals. In Portugal, stations are planned at Évora and, on the border between the two nations, in the area of Caia (which will serve the inhabitants of the Elvas and Badajoz regions). It will also enable links with the planned logistical hubs of Poceirão and Elvas.

In order to ensure the planned connection time of 2 hours and 45 minutes, the high-speed railway line will enter Lisbon from the left bank of the Tagus River, which will imply the construction of a new bridge. This project has been dubbed the Third Tagus Crossing (TTC), which will link Chelas and Barreiro.

Part of the Lisbon-Madrid route of the high-speed network will be built on a common platform with a new conventional railway link connecting Sines – Elvas/Caia, which will result in reduced construction costs for both projects.

This line has a potential demand of 9.3 million passengers in both countries. It will ensure the link between the two Iberian capitals, with connection times and standards of mobility and competitiveness that are equivalent to the results achieved on the main existing European economic routes, thus constituting a viable alternative to air and road transport links.

The Oporto-Vigo route

The Oporto-Vigo route will be developed in two stages and will be implemented in accordance with the results of the viability studies that are currently underway. It will ensure a connection time for passengers of 60 minutes on the direct link between Oporto and Vigo:

• At an initial stage, the current infrastructure linking Oporto and Braga will be adapted. The new section between Braga and Valença (55km) will be carried out in a versatile manner keeping in mind a later migration to the European gauge
• At a later stage, according to demand, it is expected that a new section will be built between Oporto and Braga, with right-of-way space guaranteed in advance. Total investment is €1.4 billion (?0.85 billion for the first phase)

This line will have a potential demand of 3.7 million passengers and will constitute a viable alternative to existing rail and air transport links between the cities of Oporto and Vigo.

Third Tagus Crossing (TTC)

In addition to the three priority routes mentioned earlier, another important element for the success of the HSN project is the construction of the third bridge over the River Tagus.

The TTC will have a total length of around 13km (7.3km over the Tagus River) in the Chelas/ Barreiro area. In addition to two dedicated railway lines for the high-speed service, the TTC project will have two conventional railway lines and could potentially include a road crossing as well.

It is foreseen that €1.2 billion of investments will be necessary to implement this infrastructure project (of which 50% is for the HSN Project). This figure will rise to €1.7 billion should the TTC also include a road crossing.

Investment and funding

It is predicted that an investment of €8.3 billion will be necessary to establish the priority routes, broken down as follows:

• €4.5 billion, for the Lisbon-Oporto link
• €845 million, for the Braga-border link (the first stage of the Oporto-Vigo route)
• €2.3 billion, for the Lisbon-Madrid link
• €600 million, for the part of the TTC for the HSN Project

Of this total planned outlay, until the end of 2006, the sum of €58.61 million had already been invested in the HSN Project (24.4% of which was invested in 2006). To date, all investments have been met by grants from the National Portuguese and European Authorities. This investment reflects the position of these two stakeholders in terms of support for the project, which will contribute towards the development of the country and the reduction of the environmental impact associated with the transport sector. It will also reinforce cohesion between EU Member States.

The financial simulation for the project, based on estimated levels of demand and operating costs for each route, reveals an operational surplus that will meet the expenditure involved in operating and maintaining rail services on both lines. It is foreseen that the routes will generate a positive and significant Net Present Value on operations.

It has been estimated that the Project will generate an operational surplus – after all operating costs have been covered, including rolling stock and maintenance – that will enable the recovery of approximately 38% of the investment. The European Union and the Portuguese State should contribute with funds to meet approximately 62% of the investment involved.

Business Model

RAVE has recently presented the business model for the Portuguese high-speed rail project, consisting on a major new rail PPP programme, consisting of six projects worth an estimated €8.5 billion.

Five separate rail links are included under the programme with another project focusing on the associated signalling and telecommunication. Two sections of the Lisbon to Oporto corridor, a further two sections of the Lisbon to Madrid corridor and a section of the Oporto to Vigo corridor make-up the links, which represent 90% to 95% of the programme’s total investment.

The telecommunications and signalling project will require around €600 million of investment over a 20-year period. This project will be procured separately for three main reasons:

• There are very few providers of this type of communications technology
• Technical risk can be more effectively managed via a single PPP project
• A single contract will create more interest in the international market

A number of significant rail PPP programmes serve as a precedent to the Portuguese high-speed rail project, including the €1.1 billion Perpignan to Figueras high-speed line, the HSL Zuid high-speed line in Netherlands and the ongoing rail concessions programme under the French rail authority, RFF.

Financing and risk allocation

The private developer(s) will be reimbursed via a mixed-payment mechanism. The private sector will maintain the infrastructure over a 40-year period. RAVE itself will procure the operating contracts. It will also procure and manage rolling stock.

RAVE is looking at a mixed-payment mechanism for the project, with 95-99% of the concessionaire’s revenue being covered via annual availability payments. The rest of the revenue will be related with the demand of trains, which will expose the concessionaire to a residual level of demand risk.

The operating cash flow will cover the Portuguese state’s contributions, around 36% of the total project funding. European funds will add a further 19% to the state contributions.

Project details and procurement timeline

The five Design, Built, Finance and Maintain (DBFM) projects will have a 40-year contract. Investment requirements and the date that projects are expected to hit the market are shown below:

• Lisbon-Madrid Corridor
• Lisbon to Poceirão – €1.6 billion – 2nd Semester of 2008
• Poceirão to Elvas/Badajoz – €1.7 billion – 2nd Quarter of 2008
• Lisbon-Oporto Corridor
• Lisbon to Pombal – €2.1 billion –2009
• Pombal to Oporto – €1.7 billion –2009
• Oporto-Vigo Corridor
• Braga to Valença – €800 million –2009
• Signalling and Telecommunications
• Valença – Lisbon – Elvas/Badajoz – €600 million –2010
• Rolling Stock
• Acquisition – 2009

A friendly environmental means of transport

For RAVE, 2007 will mark the conclusion of the preliminary studies and environmental impact studies for the priority routes of Lisbon-Oporto and Lisbon-Madrid, and the beginning of environmental impact assessment procedures, planned for conclusion between the end of 2007 and 2008. In parallel, studies for the Oporto-Vigo link will also be carried out.

It is impossible to over-emphasise the environmental benefits of the high-speed rail system.

The figures for environmental benefits associated with atmospheric pollution on the Lisbon-Oporto route – passenger traffic – indicate cost savings to the tune of €18 million in 2025. With regard to the figures for environmental externalisation/benefits associated with the Lisbon-Madrid route – passenger and cargo traffic – it is expected that cost savings will be achieved to the tune of €75 million in 2025.

In terms of increased levels of demand for transportation, with the implementation of the high-speed network it has been estimated that:

• By the middle of the next decade, the demand for mobility at a national level will have doubled as compared to present levels of demand (i.e. the distances travelled in the same time period will be double)
• On the Lisbon-Oporto corridor, 52% of the population resident in Portugal will be able to access the nation’s two main cities with travel times of two hours or less and 90% of the population in less than three hours
• A corridor connecting Portugal’s main economic, scientific, technological and cultural centres will be created, which will now be better articulated and more easily accessible
• This corridor will have an economic and populational dimension on a European scale
• The implementation of the high-speed rail network between Lisbon and Madrid will enable a reduction in travelling time by around 75%. Actually conventional trains connect Lisbon and Madrid in 11 Hours, in the future high-speed trains will take 2 hours and 45 minutes

This reduction in travelling times will result in the fact that users of the high-speed network will have more spare time available and could use this time for professional or leisure activities.

The HSN project will also have positive effects in terms of improved safety and reliability for rail transport and lower rates of accidents – the implementation of the high-speed network will contribute towards a reduction of €150 million, in 2025, associated with the heading ‘accidents’ as external costs of the project, i.e. about 61% of the total of such costs.

These positive effects in terms of accident rates are the result of a potential transfer of road traffic to the high-speed rail network and the consequent reduction of traffic on the main national highway routes, namely on the A1 and IC1 highways in the case of the Lisbon-Oporto route, and the A6 and E90/A5 (Spain), in the case of the Lisbon-Madrid route.

On the other hand, the introduction of the high-speed rail system will result in an improvement in the quality of services provided via the existing rail network, namely by means of greater passenger comfort, a reduction in travel times and enhanced reliability in terms of punctuality.

GSM-R implementation

A mobile communications network will be deployed on the HSL Lisbon-Madrid. According to the implementation chart published in the article of Mr. Frederico in Global Railway Review 4/06, signalling and telecommunications studies and specifications are currently in progress. A call for tender is scheduled during 2009 while detailed plans will be in place by 2010. More information on the GSM-R plans for Portugal you can order a back issue copy of Global Railway Review 4/06. Please contact Karen Hutchinson, Publications Assistant: [email protected]

About the author

After graduating in Civil Engineering from the Higher Technical Institute (IST) in 1991, Carlos took a Master’s degree in Transport at IST in 1995. He has been a lecturer at IST since 1993, teaching Transport, Communications and Road Traffic Management among other disciplines. Between 2000 and 2002, he was a member of the consortium providing financial advice to NAER on the tenders for the new Lisbon Airport and the privatisation of ANA, and was an Adviser to the Health Partnerships Mission secretariat between 2001 and 2002. From 2000 to 2005, he was Managing Director of Mobilidade, a company providing consultancy services in the area of Public-Private Partnerships for Transport, Energy and Environmental infrastructures. From 1997 to 2002, he was adviser to the Secretary of State for Public Works, responsible for the PPP programme in the roads sector.