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High Speed rail challenges & options: indian perspective

International Seminar on High Speed Rail in IndiaFebruary 01, 2013

Vinay Kumar SinghGM (PP&D)Rail Vikas Nigam Ltd.

11ContentsI. Need of High Speed Rail in IndiaII. Key Issues and ChallengesIII. Implementation Options22WHAT IS HIGH SPEED RAIL?As per UIC definition, trains running at speed of 200kmph on upgraded track and 250kmph or faster on new track are called High Speed Trains.

These services may require separate, dedicated tracks and "sealed" corridors in which grade crossings are eliminated through the construction of highway underpasses or overpasses. 3WHy HSR IS REQUIRED In India ?44ENERGY EfficiencyHigh Speed saves Energy Costs and reduces Greenhouse Gases0102030405060Fuel equivalent grams per passenger-kilometerHigh SpeedRailwayBusPlane

51.129.918.317.612.1Classic TrainPrivate Car5

Land requirementA HSR-line allows more passengers than an six lane highway per hour Elevated rail corridors reduce the hassle of Land Acquisition.Land requirements are Smaller35 m6Decongestion and capacity additionHigh Speed RailMotorwayDouble Track2x3 Lanes12 Trains per hour per Direction4500 Cars per hour per direction1000 Pax/Train1.7 (Average) Passengers per carCapacity = 12000 Passengers per hourCapacity = 7650 Passenger per HourReduction in commuting time between cities and added capacity gives an excellent opportunity for decongestion of the mega urban centers and growth of smaller towns and other cities.7Increasing UrbanizationThe major challenges faced are:

Major Urban centers are severely congested:Dramatic growth in vehicle ownership in the past decade.Accessing jobs, education - becoming increasingly time-consuming. Billions of man-hours are lost with people stuck in traffic.8 Explosion in Inter City Travel

Indias urban population - 285 million reported in the 2001 census and 377 million in 2011 census.

McKinsey Global Institute (MGI) projects - 590 million by 2030 (40% of Indias total projected population).

Increasing Urbanization

The rapid urbanization in the country has triggered a growing demand for inter city traffic between metropolitan cities and 2nd and 3rd tier cities.

In absence of HSR, passenger traffic of Airlines/ Car users is growing at 15-20%9DECONGESTION of Metropolitan citiesTier I CityWithout HSRWith HSRTier IITier I CitySmall towns and Tier II & III CitiesTier I CityTier II cityTier II city10TRAVEL TIME ( Trigger for modal shift)

Delhi (city centre)(city centre)Delhi AirportChandigarh Airport

.75 hr30 min1.25 hrs at Terminal + 1 hr Flying timeTotal time: 3.5 hrsPlane

Delhi (city centre)Chandigarh(city centre)Total time: 1 hrHigh Speed RailwayJourney time for air travel involves travel to airport, away from city centers and waiting time at Airports. Distance between DELHI to CHANDIGARH is 245 Km.11HSR is energy efficient and is less polluting than Road/Air travel. Economically as well environmentally, Rail based Transport system is ideally suited for India.NEED FOR HSR IN INDIAIndian imports about 80% of its oil requirement. HSR will use indigenous energy resources like thermal/hydel/nuclear based energy1213Decreasing modAl shareIndia became a decidedly road-dominant economy in the beginning of the eighties with the railways losing out in respect of both freight traffic and passenger traffic.13 14

Introduction of TGV service in 1981-83Evolution of first Class rail traffic in France Before and after opening of the first HSR line Existing long distance rail services have difficulties in competing with road and air modes of transport,

The new HSR lines can stop the decline of the railways share on the long distance transport segment along those corridor.

It provides an attractive transport offer in terms of reduced travel times and comfortable journey.

Despite the high investment cost it is economically sustainable and need of the hour.

IMPACT OF INTRODUCTION OF HSR15Key Issues & Challenges15Key Issues & Challenges16System Integration(1) Political Will(4) Financing HSR Project(s) (5) Land Acquisition(3) Economic & Financial Viability (7) Selection of Technology

High Speed Rail Development(2) Selection of Project Corridor(s)(6) Policy Framework16(1) POLITICAL WILL17 Each HSR corridor will have a long gestation period and will be highly capital intensive, so, strategic thinking is required at the Apex level for implementing in a programmed manner

Coordination among Central Government Ministries, State Governments and Government Agencies

Success stories- National Highways, Airport up-gradation, Yamuna express-way

17(2) Selection of Project Corridor(s) for Implementation18 Vast country Many potential corridors - Selection of pilot Project;

Economically/financially viable projects to be given priority;

Willingness of local governments to participate in the project by way of land and funding support.

18(3) Economic & Financial Viability of the Project 19 High capital cost will impact viability

HSR will be a dedicated line; High demand risk due to higher tariffs as compared to conventional rail.

Emphasis on other alternative revenue sources like Real estate revenues, carbon credits, cross-subsidy from road/air travelers.

19(4) Financing of the Project(s) 20 The high capital costs of HSR makes it a financing challenge.

GOI may not fully fund the corridors.

Most state governments will have to raise finances by extra levies, real estate etc. even for part funding

Private sector may not have adequate financing capability to fund the large HSR projects. Proper project structuring by unbundling the projects into smaller packages may be essential.

Funding by multilateral and bilateral funding agencies

20(5) Land Acquisition21 Critical due to stringent alignment requirements

HSR corridors pass through conurbations or sensitive land;

Strong public protests adversely affecting large number of projects.

Mix of alignment choice- grade/ elevated/ tunnels

21(6) POLICY FRAMEWORK22 Robust policy framework for: Seamless implementation of projects

Assurance for attracting International investors

Creation of National High Speed Rail Authority

22(7) Selection of Technology23Choice of Technology:A) Fixed Infrastructure:Mix of Embankment/Elevated/ Underground Structures and their dimensional control;Construction Gauge;Fencing of the complete track/elevated track;Electrical Installations. B) Fast Upgrading TechnologyRolling StockSignaling and Communication Train Control Fare Collection

23Implementation Options2424INTERNATIONAL CASE STUDIES2525TGV, France 26French Govt.

SNCF - French national rail operator

Rseau Ferr de France (RFF) State ownedAccess Charges(for use of rail infrastructure)Infrastructure ManagerOperatorThe first opened in 1981 between Paris and Lyon (480 Km) and now total network 1887 km. French govt. plan to have new 2000 km HSR lines by 2020. Borrowing from the international markets to enable it to undertake major projects but not on a particular project basis. This funding is supported by government guarantee but is restricted to the amount that RFF can repay from the access feesThe rolling stock for the TGV lines is procured by SNCF and is funded through lease commitments26TGV, France 27In addition to borrowings, the TGV lines have also been developed with grant funding from local sources. Funding pattern for three TGV lines are: Funding by SourceTGV EstEast Rhine RhoneBrittany loireFrench State39%31%32%Regional funding24%29%35%RFF22%26%33%SNCF2%4%n/aEU10%8%n/aLuxembourg4%n/an/aSwitzerlandn/a3%n/aConcession modelPartnership contract Rail operators pay an access charge based on their actual use of the infrastructure Demand risk lies with the concessionaireRFF pays a rental or availability fee based on the performance of the private sector partner Demand risk remains with RFFForms of PPP models followed by RFF to create Infrastructure27Infraspeed Consortium: Fluor Daniel BV, Koninklijke BAM/NBM Amstelland NV, Siemens Nederland NV, Siemens Transportation Systems, Innisfree Limited and Charterhouse Project Equity Investment Limited 30 years Concession on DBFM (PPP) basis

HSL Zuid, Netherland 28HSADutch govt 6 D&C contractors

One D&C contractorRail SystemsNetwork ConnectionsSubstructurePassenger Transport 125 km line between the Netherlands (Amsterdam) and Belgium border (Schiphol). This lines provides connectivity of Amsterdam to Brussels and Paris

28HSL Zuid, Netherland 29The PPP did not include the transfer of any demand risk. Infraspeed is remunerated on an availability basis, subject to deductions for unavailability of the infrastructure.

The Dutch government finances: The substructure of the HSL The PPP infrastructure payments to Infraspeed These are partly financed by revenue from HSA Total costs: 7.2bn.

The value of the PPP element of the project was approximately 1bn. The 1bn project financing for the PPP includes: 605m syndicated term loan (comprised of two Senior loans with a term of approximately 27 years) 119m subordinated debt bridge facility 15m working capital facility.

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TAIWAN30Consortium led by Kawasaki Heavy Industries A concession to finance, construct, and operate the High Speed Rail System for a period of 35 years and a concession for HSR station area development for a period of 50 years.

Demand risk transferred to the private sector operatorTaiwan High Speed Rail Corporation:Alstom Transport SA of France and Siemens AG of Germany The link Taipei to Kaohsiung - total length of 345km. The project had a construction value of approximately US$18bn.Infrastructure ManagerProcurement of Rolling StockTaiwan Govt.

10 % of yearly earnings to government for further HSR development during the HSR operating concession period regardless of the performance of the concession company. The accumulated amount could not be less than US$3.4bn.3031Implementation OptionsConsidering the case studies, following could be the implementation optionsNon PPP Option: The project are implemented by the Government on EPC basisPPP OptionsOption 1: Design, Build, Finance, Operate and Transfer (DBFOT) of the entire project by a single Private DeveloperOption 2: Unbundling the project into different components, so as to make the project components attractive to private players from the perspective of affordability in terms of size and risk allocation:B&T (Fixed infrastructure)DFOT (Train operations)3132Implementation OptionsWhether project is implemented through PPP or partial Government funding route, pre-construction activities should be started in a programmed manner Government guidelines

MOR has already created a company named High Speed Rail Corporation of India as a subsidiary of RVNL.

3233Funding OptionsProject Development ActivitiesA separate fund may be createdTo be recovered from viable projects along with additional feeRolling fund for further project development activities

Funding Support for PPP projects:Viability Gap FundingMultilateral/Bilateral loans by providing Centre government guaranteesCentre government guarantee for Long term Bonds of Project SPVs

3334Funding OptionsFunding Support for Non-PPP Projects Directly funded by Centre/State Governments

Other Sources of Funds Revenue share from Concessionaires (train operators) Contribution from State Governments Real Estate Development3435Status of Prefeasibility StudiesProject CorridorsStatus of Prefeasibility StudiesPune Mumbai - AhmedabadFinal Report submitted.Delhi Agra-Lucknow-Varanasi-Patna Final Report submitted.Howrah HaldiaFinal Report submitted. Hyderabad-Dornakal-Vijaywada-ChennaiDraft Final Report submitted.

Chennai-Bangalore-Coimbatore- ThirvanantpuramDraft Final Report submitted.Delhi Chandigarh - Amritsar Consultant yet to be engagedDelhi-Jaipur-Ajmer-JodhpurConsultant yet to be engaged35Thank You3636