ADIF looks towards the future

Heavy investments will be made in the Spanish railway network in forthcoming years.

The Spanish railway network has been split into separate companies managing the railway infrastructure (ADIF) and train operations (Renfe). There is strong political impetus to invest in the railways, with the 15-year Strategic Plan for Transport Infrastructure (PEIT 2005-2020) outlining the way in which the rail network will be upgraded.

But first, a little history dating back to when Spain entered the European Union. In 1986 the Spanish railways were in a critical situation:

• A very deteriorated image
• Increasing debt year after year
• 80% of lines on single track
• 800km of lines showing large deficits
• A falling market
• Activity aimed at production rather than customers
• Interoperability problems (a different gauge to most of the rest of Europe)

The transformation of Renfe was based on three strategic courses of action, the first being to develop investment as follows:

• Investment in new lines, with the construction of the Madrid-Seville line between 1986 and 1992 at a cost of €3.4billion. Trains will then take 2hr 20min to cover the 471km route, with a top speed of 300 km/h
• Major investments in local services, with plans in the main cities (458 million passengers / year in 2005)
• Modernisation of the rolling stock fleet, with a spend of €3.3 billion between 1991 and 2003

The second thrust was sectorisation of the business, with the creation of individual business units in 1991 with their own aims and resources.

The third factor was the development of contractual relations with the State after 1994, with long-term contracts that determined the state contribution and commitments to service and results on the part of the railway.

Investment in rail infrastructure in 1991 was around 0.4% of GDP. This subsequently decreased but recovered after 1998 to exceed 0.5% after 2002, above the corresponding figure for roads from this year onwards. By 2006, the figure was just below 0.7% at €6.3 billion. This represented 48.2% of the total amount spent by the Spanish Ministry of Public Works and Transport – Fomento – on all transport modes.

Overall, just considering the 1991-2006 period, more than €42 billion have been allocated to the railways in Spain. Of this investment, €3.3 billion were allocated to rolling stock between 1991 and 2003, with 40% of this amount being directed at commuter trains, together with the AVE high-speed trains (17% of investment), the real engine of change in the image of Spanish railways.

As a result of this, the number of passengers between 1991 and 2005 increased by 62% (cumulative annual average of 3.5%) to 505 million. Tonnes-kilometre transported grew in turn by 42% between 1993 and 2005 (cumulative annual average of 3%) to reach 11.07 million tonne-km in 2005. This rate of growth is higher than that for most other European railways and above that relating to the EU-15 group of countries.

Nevertheless, the modal participation of the railway in freight traffic is especially weak in Spain, practically half that of the EU-15, in spite of the average transport distances in Spain and the importance of international transport for our country favouring the rail mode.

Increasing productivity

The reforms implemented over the past 20 years have had a positive outcome.

Between 1992 and 2004 (the last year when Renfe controlled both track and trains) revenue grew by 88%, but despite rising traffic train-km were reduced by 3%.

The same period saw a 39% reduction in staff. When coupled with the rising traffic, revenue per employee rose by 211%. Commercial revenue in 2004 represented more than 150% of staff costs, compared to 85.6% at the beginning of the period.
Renfe management has aggressively exploited opportunities for revenue growth, from areas such as real estate development, shopping areas in stations, agreements with Regions, use of the railway right-of-way for fibre optic cables and so on. These non-core sources of revenue have reached as much as a third of passenger revenue and have exceeded the figure for freight in recent years.

The favourable trends in revenue and expenses have made it possible to considerably reduce public subsidies. The railway has almost broken even on operating expenses, and the State contribution to Renfe has been reduced by 30% since 1994 (nearly 50% at constant prices).

The PEIT

Following the opening of the new Madrid-Seville line, high speed construction has been continued to Barcelona (planned to be opened in 2007) and the French border (including the private concession on the Figueras-Perpignan cross-border section to be open in 2009). There are currently 1,237km of high-speed route in operation and 1,505km under construction. Lines of note include the Camp de Tarragona-Barcelona section, the Madrid-Valladolid connection (including the spectacular 29km Guadarrama tunnel) and the new Córdoba-Málaga line.

A new Transport Infrastructure Strategic Plan (PEIT) was approved by the Spanish Parliament in July 2006 and marks out the 2020 horizon, with an intermediate phase in 2012. Of the total €249 billion planned for the 2005-2020 period, €137 billion will be allocated to the railway, with 43.7% directed at interurban lines, with the emphasis on mixed passenger / freight traffic routes. Coupled with the release of capacity for freight trains on the conventional network brought about by the opening of new high speed lines, these investments should help the one matter still to be resolved in the modernisation of Spain’s railways: namely, a major role for the railway in freight transport.

Following a green agenda, the railway is seen in the PEIT as the main player in the transport plan, with the largest investments of all modes in the Plan period. The PEIT envisages a 10,000km High Performance Network, connecting all the main provincial cities and ensuring that 90% of Spanish citizens are less than 50km away from a station on this network. Other key issues include the integration of the new high speed lines with the conventional network, access to ports, the development of international freight corridors and interoperability (both with neighbouring networks and also between track gauges in Spain).

New high speed line investment in the short run will amount to a total annual figure of more than €4.7 billion in 2007. Other areas of big spending include Renfe’s investment in rolling stock (nearly €1 billion), and ADIF’s investment in maintenance and renewal of the conventional network (more than €1.1 billion).

One aspect worth emphasising is interoperability, with international and internal services on different track gauge networks and the adoption of the European Rail Traffic Management System (ERTMS) system on new lines, which form part of the Trans-European Networks. With regard to trains, three different gauge-changing technologies (from manufacturers Talgo and Caf) allow services with interoperable vehicles to run at speeds of up to 250km/h.

The socio-economic effects of this important investment in rail infrastructure must also be highlighted:

• The Hermin-Spain simulation model used by the Ministry of Economy predicts a strong multiplier effect from spending on the railways. Annually the cumulation of the effects of railway investments on demand (in the construction stage) and on the improvement of productivity (during the operation), means a total effect on GDP that multiplies the investment amount two and a half times (from 2005-2007)
• Production distributed throughout the different sectors of economy also multiplies the investment (final demand) by 1.9 times, with an estimated increase of average annual employment of 210,000 and a decrease in the unemployment rate of 0.46 percentage points
• For each domestic Euro (apart from the European Union aids) spent on railway infrastructure, net tax revenues will increase by Euro 0.6 due to the effects of demand and will also increase another Euro 0.6 due to the effects on supply by the end of the period.

A new industry structure

A fundamental change took place in 2005, aimed at opening up the possibility of new operators entering the rail market, whilst at the same time ensuring the economic sustainability of the public railway operator. The state company Renfe has been divided into an infrastructure administrator, ADIF, while the responsibilities of Renfe are now confined to railway operations. The reorganisation was accompanied by a financial restructuring, which saw railway debt reduced from €7.9 billion to €2.5 billion, the State assuming nearly €5.5 billion of the debt in exchange for the property transfer of conventional lines.

The previous organisation of Renfe as a set of business units made the reorganisation possible without any trauma, with staff being divided practically in a 50/50 way.

The evolution of Spanish railways into the new model has made it possible to comply with European Union legislation. Railway Industry Law 39/2003 came into force on 1 January 2005. This law prompted the formal division of the two activities of infrastructure management and train operation (with the integration of GIF into Renfe and the immediate segregation into two new companies: Renfe Operator and ADIF). This new model makes it possible for new operators to enter the market, while continuing to promote the traffic growth that has characterised recent years.

ADIF has 14,287 employees (31 December, 2006) and is in charge of a network of 12,991km, 11.6% of which can be travelled at speeds between 200 and 300km/h. There is a high speed network of UIC gauge of 1,237km that exists side by side with the conventional network of 11,754km. ADIF manages traffic of 5,000 trains each day and 184million train/km per year. ADIF uses the most advanced technology and is a leader in interoperability in Europe.

ADIF invests in new lines which amounts close to €5 billion each year (ADIF is the leading investor in the Spanish state) and provides Renfe-Undertakings with this network. Renfe-Undertakings has access to the network through the payment of track access fees, as do new undertakings that have safety licence and security certificates and that request and obtain paths on the railway by means of capacity assignment carried out by ADIF.

For the development of the Strategic Plan of Infrastructures and Transport Services (PEIT) in Spain, the experience and capacity of ADIF is without doubt a guarantee of success. The high speed line will soon reach Barcelona and in 2009 the Spanish network will connect with the European network of UIC gauge through the Figueras-Perpignan international link (a successful example of a Public Private Partnership project). This will allow the direct connection of passenger and freight trains between Spain and the rest of Europe without a change of gauge, and it is hoped that this will prove to be the turning point in the fortunes of rail freight in Spain. High speed trains will also reach Valladolid, which is expected to have a big impact on the northern and north-western area of the peninsula. Likewise high speed trains will also reach Malaga.

Big impact

Some figures will allow us to assess the contribution of the Spanish railways to development and sustainability. As an example, the new Madrid-Barcelona line is costing €10 billion for 672km length. Altogether there are expected to be 16million journeys pa on the new route. The new line will prompt transfer of 3.3 million passengers a year from private cars, and 1.3 million from the plane; there are expected to be 4.4 million journeys induced by the new ease in travelling. This will increase the modal share of the railway from 20% to 47% for all services affected by the line.

The modal shift will allow annual savings in externalities as follows:

• Noise, pollution, accidents, climate change: €325 million pa
• Energy: €50 million pa
• Travel time reductions: €170 million pa

ADIF Strategic Plan

The ADIF Strategic Plan covers a horizon of four years (2006-2010) and has been the result of profound considerations in which all the areas of the company have taken part.

The general aim of this Plan is to set ADIF as an organisation of reference amongst European infrastructure managers with regard to innovation and integration of management models based on excellency and social commitment. This general objective can be stated by two specific goals:

• To provide for the access of railway undertakings to infrastructure on a level playing field
• To promote an increase in the share of railway transport against other transport modes, in freight and passenger transport/traffic

To achieve this, the ADIF Strategic Plan points out specific aims for:

• Becoming a reference as one of the most safe railway systems, through a decrease in accident rates
• To promote innovation for the development of new operations starting from the assets managed
• To become the first European reference for service quality achieving a punctuality rate of 98%
• To reach the maximum operating efficiency, with an objective of an operating cost of €45,000/km per year
• To achieve financial and economic balance with a total coverage of operating costs at the end of the period

Framework Contract

Finally, another important landmark has undoubtedly been the elaboration of the Framework Contract between ADIF and the General State Administration, which was endorsed by the Council of Ministers on 26 January 2007. This Contract, which is valid for four years (2007-2010), totally fulfils the European Union recommendations as a multi-annual planning and financing device as well as a basic instrument for the railway infrastructure managers’ activities.

The Contract Programme which is specifically aimed at operations and investments in the conventional network that is owned by the State, is of the greatest importance to ADIF as it gives stability to the company in the development of its performance, and in the fulfilment of the above-mentioned objectives of our Strategic Plan.

Hence, in the financial area it envisages important investments for the conventional network, which will be completed with the investments in the high performance network, both in lines which are owned by ADIF or by the State.

ADIF will obtain from the direct contributions from the State (€11.9 billion) and other financial sources (such as European Union funding and debts with credit entities), the necessary funds to assure the management of the network and undertake investments of approximately €24 billion over the four years of validity of the Contract.

€6.5 billion from direct state contribution will be assigned to the State-owned conventional network. ADIF will renovate 500km of tracks and modernise 350km of overhead power cable. It will improve 900 level crossings, will continue to replace telecommunication systems and will build new suburban and interchange train stations.

ADIF is committed to the fulfilment of quality objectives, measured through the parameters of track quality, reliability, availability, accident parameters and punctuality.

For ADIF, this multi-annual contract is an essential document to assure the future of railways in the medium and long term in the PEIT framework. Specifically, it will facilitate an increase from almost 20 billion passenger-km to more than 33 billion passenger-km by 2010. Almost half of this traffic will use the high speed network owned by ADIF, with very high levels of quality and satisfaction.

The public authorities are confident about our role. The citizens of Spain take a pride in the quality and efficiency of the railway system. The hopes of the workers that take part in the modernisation of the system are high. All in all, the Spanish railways are set fair for the future.