French High-speed Rail PPP CaseFrench High-speed Rail Public-Private Partnership (PPP) Case
|OWNER / IMPLEMENTATION UNIT|
National Railway Company of France (SNCF) and France Railway Network Corporation (RFF)
Public-Private Partnership; PPP; High-speed Rail
March 11, 2016
Legislation passed in 2006 authorized Réseau ferré de France (RFF) to establish public-private partnerships (PPP) for railway investment. As a result, the public sector can utilize technology and capital investment from private companies to construct large infrastructure projects. Two PPP models, partnership contracts and concession agreements, are primarily used. From 2010 to 2012, RFF used PPPs to construct three high-speed rail projects and one station project.
The three main contractors involved in PPPs in France to date include Eiffage, Vinci and Bouygues. A cooperative partnership contract PPP model with Eiffage was used to finance and construction the Brittany to Loire high-speed rail line (BPL). A concession agreement PPP model with Vinci-LISEA Enterprise Alliance was used to finance and construct the Southern Europe Atlantic high-speed rail line.
Leveraging private capital has reduced public sector investment pressure for railway infrastructure construction and offered opportunities for private investment in railway construction in France. Private investors will profit from user fees and concessional operations in the long run.
From 2010 to 2012, RFF used PPP financing to construct approximately 671km of railway line at a total cost of EUR 14 billion, of which only EUR 6.3 billion was subsidized by the French government. The BPL line is 182km. The EUR 3.3 billion investment was shared by the government (27%), RFF (42%) and a consortium of 12 banks formed by Eiffage (30%). A 25-year PPP contract was awarded to Eiffage. RFF agreed to pay EUR 100 million annually for railway rent for 20 years. The SEA line is 303km. The EUR 7.8 billion investment was shared by RFF (13%) and the government (38%), with the balance provided by private companies. A 50-year concession agreement was awarded to Vinci-LISEA Enterprise Alliance.
RFF’s gross income in fiscal year 2013 was EUR 5.69 billion with a net loss of EUR 60 million.
ARAF, EPSF, Eiffage, Vinci, and Bouygues
In order to improve efficiency and service quality of the railway system, RFF and the French Railway Operation Company merged with the SNCF Group in 2015.
PPPs were used to finance railway infrastructure (track and station) to reduce public sector investment pressure for railway construction and speed up the implementation of high-speed rail projects.
RFF (SNCF Réseau): www.sncf-reseau.fr/