Railway Newsletter

Private railways in Bolivia are to be renationalised under new plans revealed by Bolivia's President, Evo Morales. Business Monitor International reported that a new state-owned railway company, Empresa Boliviana de Ferrocarriles, will be created for managing the railway network. An ambitious project aimed at transporting iron ore is to link Bolivia's eastern and western rail networks at an estimated cost of US$2 billion. Refurbishment of the decaying western line is also part of the governmental strategy, after discussions on an inter-oceanic freight railway took place between Bolivia, Chile and Brazil. Chile has planned to build 206 km of railway line between the Port of Arica on the Chilean coast and the Bolivian border.

In 1996, the government awarded two 40-year concessions to Empresa Ferroviaria Andina SA (FCA), which operates a 2,261 km network, and Empresa Ferroviaria Oriental SA (FCOSA), with a route length of 1,243 km. Chilean company Empresa Cruz Blanca SA acquired 25 per cent of FCA for US$13.2 million and 75 per cent of FCOSA for US$25.9 million. The US rail company Genesee & Wyoming Inc is now a major shareholder in FCOSA, whilst the Bolivian government retained important stakes in both rail companies through pension funds.

(Source: Business Monitor International)

DB Schenker Rail has acquired a majority stake in the Italian rail freight operator NordCargo srl and has become the second-largest rail freight operator in Italy. The rail subsidiary of DB Schenker bought a further 11 per cent stake after having acquired a 49 percent stake in NordCargo in January 2009. The deal will see the present business of DB Schenker Rail Italia transferred to the Milan-based NordCargo which will continue to operate under this name. The new structure will have 300 employees.

Transports to and from Italy accounted for about one quarter of the company's total international revenues in 2008. "The amalgamation of these two companies will enable us to improve our product portfolio in Italy and along the north-southbound corridors, thus laying the basis for attracting more transport onto rail in both the international and the Italian domestic markets," said Dr Alexander Hedderich, Chairman of DB Schenker Rail.

(Source: DB Group)

The French National Assembly has passed a law to set up the Regulatory Authority for Railway Activities (Autorité de Régulation des Activités Ferroviaires, ARAF), a legally and financially-independent rail regulator, according to International Railway Journal. ARAF's main role is to ensure fair and transparent access for all companies operating on the French rail network. ARAF, consisting of seven independent commissioners, will have the right to access the accounts of French Rail Network (RFF) and train operators and also to regulate charges levied by RFF for using the rail network.

(Source: International Railway Journal)

At the end of 2009, the government of Thailand authorized a further THB50 billion (US$1.5 billion) in addition to an already approved THB100 billion (US$3 billion) revised plan to restructure the State Railway of Thailand (SRT). The Bangkok Post quoted transport minister Sohpon Zarum saying that money will be spent on acquisition of new locomotives, improving traffic signals and construction of 767 kilometres of new double track railway lines.

SRT is to be split into three business units (infrastructure, train operations and engineering) and one subsidiary for the Bangkok airport rail link. The transport ministry will issue regulations regarding construction of roads and safety procedures at level crossings.

The SRT staff of Bangkok airport rail link is currently trained by specialists from DB International, a subsidiary of Deutsche Bahn, following a €1.7 million contract signed last year. The agreement is for the provision of consultancy services, including instruction and manuals on operation, safety and emergency management.

(Sources: Bangkok Post; DB International)

The Legislative Council of the Hong Kong Special Administrative Region has approved funding for a 140 km high speed railway to connect the city to China's 16,000 kilometre high speed national rail network. Construction of the HK$66.9 billion (US$8.6 billion) infrastructure project is expected to start this year, according to Railway Technology. Travel time between Hong King and Guangzhou in China will be cut to 48 minutes when the new line is operational in 2015.

(Source: Railway Technology)

Georgian Railway LLC is to receive a €125 million loan from the European Bank for Reconstruction and Development (EBRD) to improve the efficiency and safety of rail operations within the capital Tbilisi. The estimated cost of the plan to build a railway route bypassing central Tbilisi is €360 million and the European Investment Bank has been asked to co-finance the project. On 9 December 2009, the Ministry of Economic Development of Georgia announced an international tender to design and construct the Tbilisi Railway Bypass.

State-owned Georgian Railway LLC, which took over the rail assets in Georgia after the dissolution of the USSR, operates the country's passenger and freight services and is in charge of both management and maintenance of the rail infrastructure.

(Sources: EBRD; The Ministry of Economic Development of Georgia)

German rail operator Deutsche Bahn has agreed a €17 billion contract with Qatar Railways Company (RAIL) to set up a joint corporation to build and operate passenger and freight rail services in Qatar. Qatari Diar, the real estate arm of state-owned Qatar
Investment Authority, is the majority shareholder in Qatar Railway Development Company (QRDC), with 51 per cent, and DB International, a subsidiary of DB, holds the remaining 49 per cent.

The planning and management company QRDC will be responsible for the construction of a national rail system in Qatar, which includes a 180 km high speed line to Bahrain, another passenger route to Saudi Arabia and a 325 km freight network. A future 300 km metro network with 4 lines and 98 stations is also part of the strategic project.

(Source: DB International)

A strategic decision to rehabilitate 414 km of the Uruguayan rail network, which may involve private sector participation, is to be made by President-elect José Mujica's administration after taking office in March 2010, according to Business News America, which quoted an official from Corporación Ferroviaria del Uruguay (CFU).

Administración de Ferrocarriles del Estado (AFE), a vertically integrated state owned company, is in charge of infrastructure and operations on the 1,641 km rail network in Uruguay. CFU (Railway Corporation of Uruguay), with 100 per cent shares held by state owned National Corporation for Development (CND), was set up in 2007, when AFE and CND signed a concession agreement to create a company to speed up the construction, rehabilitation and maintenance of railway infrastructure.

(Source: Business News America)

India has witnessed a rising number of rail accidents at the beginning of this year, three of them occuring on 2 January 2010 in the northern Indian state of Uttar Pradesh. Two express trains collided near Kanpur and left at least ten people dead and about 50 injured, according to Hindustan Times. In a separate accident, the driver of the Lichchavi Express was hurt after the train ploughed into a stationary train near the town of Etawah. Another passenger train hit a tractor at an unmanned rail crossing near Allahabad. Rail officials blamed dense fog for all three accidents, although pending inquiries are expected to look into railway safety issues.

A day later, all seven coaches of the Arunachal Pradesh Express derailed in Assam region, but no-one was hurt. The Indian Express reported that at least three people were killed and 14 others injured when the Kalindi Express train slammed into the Shram Shakti Express near Agra, on 16 January 2010. The following day, a Harihar Nath Express train hit a car at an unmanned crossing in Barabanki district, killing two persons in the car and severely injuring four others. On 22 January 2010, rail traffic was disrupted by the derailment of a freight train near Azamgarh in Uttar Pradesh.

(Sources: Hindustan Times; Indian Express)

Australian transport and logistics company Queensland Rail (QR) has been awarded a A$2 billion (US$1.8 billion) long term coal haulage contract with Xstrata Coal, Australia-based subsidiary of the Swiss international mining company Xstrata plc. Queensland's state Premier Anna Bligh said that "this contract sends a clear message to QR workers. A listed QR National will be successful, providing job security for its workers and creating new jobs into the future."

Lance Hockridge, chief executive officer of QR, announced an investment of about A$100 million in new locomotives necessary to increase its transport capacity to more than 240 million tonnes next year, when the new agreement is due to be implemented. QR employed 1,700 people and provided 28,403 services delivering 186.7 million tonnes of coal in the financial year 2008/2009.
On 8 December 2009, the Queensland government unveiled a plan to break-up and partially privatise QR. The government will form a new state-owned corporation to operate QR's passenger services in public ownership, whilst the coal and general freight businesses are to be floated on the Australian stock market at the end of 2010. Treasurer Andrew Fraser announced that the state government is to retain a 25 to 40 per cent stake in the future QR National, and that all QR coal and freight workers will be gifted A$1,000 worth of shares and given the opportunity to purchase an additional A$4,000 in shares at a discounted rate.
(Sources: Queensland Rail; Queensland Government)

Swedish tendering authority Jönköpings Länstrafik AB announced on 1 December 2009 that Danish State Railways (DSB) has won the tender for regional train services in the Jönköping area. When DSB Småland AB, a subsidiary of DSB, starts operations in December 2010, one third of DSB's traffic will be in Sweden. "Sweden is already our second home market and with the takeover of the operation of Krösatåg, DSB will expand its position in Southern Sweden further" said DSB's CEO Søren Eriksen.

DSB is already operating the Swedish part of the Øresund services and Roslagsbanen in Stockholm. In August 2009, DSB was awarded the contract for regional and commuter train services in Sweden's second largest city, Gothenburg. The total Swedish rail network that will be operated by DSB will exceed 2,000 km, which is 600 km more than the whole Danish network.

(Source: DSB)

The board of directors of Russian Railways (RZD) have approved plans to issue bonds worth RUB200 billion (US$6.77 billion). According to the information agency RZD-Partner, citing Interfax reports referring to the company's statement, RZD is to register fifteen issues of exchange and conventional bonds. The move is aimed at raising capital and to enhance its loan portfolio.

State-run transport company RZD has reported a decline of 16.9 per cent in freight traffic and a 12.3 per cent fall in passenger numbers for the first eleven months of 2009. Although the figures for rail freight were 5.5 per cent higher in November year-on-year, indicating a slight recovery of the Russian economy, financial results for 2009 are expected to be 9.0 per cent lower than in 2008.

(Source: RZD-Partner)

Trenitalia, a subsidiary of the Italian state-owned rail operator Ferrovie dello Stato, has invited interested companies to submit bids for a €1.2 billion contract for 50 high speed trains. AnsaldoBreda, the rolling stock division of Finmeccanica Group and Canadian giant Bombardier have teamed up to jointly offer high-efficiency trains equipped with new technologies, revealed railway-technology.com. Alstom, Siemens and Kawasaki are reportedly on the tender shortlist.

(Source: Railway-technology.com)

The Portuguese Ministry of Public Works, Transport & Communications announced on 12 December 2009 that Elos consortium has been awarded a contract to design, build, finance and maintain a high speed line between Portugal and Spain. Construction of the 165 km high speed line linking Poceirão to Caia at the Spanish border and 90 km freight line between Evora to Caia is scheduled to be completed by 2013, when state-owned railway operator Comboios de Portugal is to start operating high speed trains.

Railway Gazette International reports that the Portuguese government will make a €137 million contribution, in addition to €60 million provided by the infrastructure authority Refer, towards the €1.65 billion estimated investment for the 40-year concession. Private finance will account for 49 per cent of the total cost, while the European Union is expected to provide a €640 million loan for the project, which is part of the Trans European Transport Network.

The Elos consortium, jointly-led led by Portuguese motorway operator Brisa - Auto-estradas de Portugal (Brisa) and Soares da Costa, comprises five other companies and two banking groups. Construction company Mota-Engil led another bidder - Altavia consortium, which included French firm Vinci.

(Sources: Railway Gazette International; Brisa)

On 10 December 2010, Belgian freight group SNCB Logistics signed an agreement with DB Schenker Rail to set up Corridor Operations Belgium Rail (COBRA), a joint production company aimed to offer international services on Belgian, Dutch and German destinations. Headquartered in Brussels, COBRA will be jointly managed by the two rail operators which will retain all commercial activities. Marc Descheemaecker, CEO of SNCB, was quoted as saying: "Our exceptional geographical position and our ambition to develop the freight activities in Belgium and in Europe, force us to look for reliable international partners."

SNCB Logistics employs over 5,000 people and has subsidiaries in Belgium, Germany, the Netherlands, Italy, France, Switzerland and Poland. German DB Schenker Rail, the freight company of Deutsche Bahn, operates 120,000 freight cars and 3,300 locomotives, and has around 30,000 employees in Europe.

(Sources: SNCB Logistics; DB Schenker Rail)

The Ukrainian government has approved a strategy for rail transport development until 2020. Improved traffic safety, increased competitiveness of rail transport and a new organisational structure are the key directions of the strategic programme. An integrated transport system, based on modern rolling stock and a new structure of tariffs, should create conditions for increased traffic volumes carried by UkrZaliznytsya (Ukrainian Railways). Improving rail management and attracting investors in projects to modernize rail infrastructure are also priorities of the government.

The government has approved an updated list of railway employees who are entitled to live in accommodation owned by the employer, ensuring that young specialists are attracted to stay in their railway jobs.

(Source: The European Union's Programme for Ukraine)

On 27 November 2009, an explosive device caused the derailment of four carriages of a Nevsky Express train travelling from Moscow to St Petersburg. The terrorist attack claimed the lives of 26 people. RZD President Vladimir Yakunin said that safety is always the company's top priority and the company will conduct an audit of security equipment and issue additional instructions to train and locomotive staff. RZD has begun to pay compensation of 200,000 roubles to each person injured in the incident, and 500,000 roubles to the families of each person killed in the disaster.

RZD has so far invested 28.7 billion roubles in its Programme for Improving Train Safety. Since 2004, when RZD was founded, until November 2009, there were no casualties in the 14 crashes and seven other rail accidents reported.

(Source: RZD)

The European Commission has announced that €500 million will be allocated for the first group of priority infrastructure projects from the Trans-European Transport Network (TEN-T) programme. The funding will go towards several projects aimed at improving transport within the European Union and comes at the right time to encourage economic growth.

EUROPA, the portal site of the European Union, announced the list of projects with a rail component that will receive grants:
• Austria (€3,400,000): Development of the Western Line Vienna-Linz.
• France (€75,996,000): New railway high speed line "LGV Est", section Baudrecourt-Vendenheim.
• Germany (€3,330,000): Water, road and rail improvements to port facilities at Köln
• Italy (€52,740,000): Rail tunnels around Torino.
• United Kingdom (€9,234,000): Felixstowe-Nuneaton works.

(Source: EUROPA)

SNCF (Société Nationale des Chemins de Fer Français) and Deutsche Bahn AG have cooperated since 2007 on a number of services, but competition has transformed open access on the European railway market into a struggle.

Euro Cargo Rail (ECR) has claimed that Fret SNCF, the freight division of the French national operator SNCF was selling its services at "predatory prices", according to Les Echos. ECR has filed a formal complaint with the French competition authority over the rights to access to France's rail network. Fret SNCF, with €600 million estimated losses this year, is reportedly not happy with new entrants on the rail market.
Created in 2005 after the liberalisation of the European rail transport market, Euro Cargo Rail is a subsidiary of DB Schenker Rail (UK) Ltd. Euro Cargo Rail accounts for 5.3 per cent of the French rail freight market and operates in the UK, Italy and Spain. DB Schenker, a subsidiary of Deutsche Bahn AG, provides rail and integrated logistic services, employing over 91,000 staff in about 130 countries. Deutsche Bahn AG owns and operates the German national rail transportation network and generated revenues of €33.5 billion in 2008.

(Sources: Les Echos; Euro Cargo Rail)

The cost of building a high speed rail network in the USA could reach US$50 billion. This is the amount needed for all the projects submitted by 24 states, but the total cost could be even higher. California has requested US$4.7 billion for a high-speed link between San Francisco and Los Angeles, and Florida has asked for US$2.5 billion for a new line between Tampa and Orlando, The Hill newspaper reports. The US Senate has earmarked US$1.2 billion to be spent in 2010 for high-speed rail projects, but campaign and pressure groups are lobbying for US$4 billion, which would create thousands of jobs. Earlier this year, the economic stimulus package allocated US$8 billion for high speed rail projects, a significant boost after years of railway underfunding.

(Source: The Hill)