Railway infrastructure financing – an aspect with vast implications in railway transport system operation (part III)

3.The influence of railway infrastructure stress on its quality

Considering the parameters presented in figure 18, we can note that:
Ci3<Ci2<Ci1 ,  Cf3<Cf2<Cf1
and      Pr3=Pr2=Pr1.

The decrease of both quality limits due to underfinancing has negative effects on the essential requirements and especially on railway safety – as a result of the deterioration of  exploitation conditions.
In order to modernize a railway system, the investment process can be completed cumulatively by applying a consecutive cumulative strategy of specific parameters increases (maximum speeds and/or maximum tonnage). By redrawing and building energy efficient routes or developing modern structures (tunnels, viaducts and bridges) long-term beneficial effects related to energy consumption, mobility and transport capacity are obtained. In most cases, the value of the savings due to these advantages pays off the initially invested funds, and then exceeds them. Such a phenomenon takes place only in conditions of intense and efficient exploitation of the infrastructure, without exceeding the projected limits.
The development strategy of the railway infrastructure presented above is schematically presented in figures 19 and 20. Figure 19 corresponds to the decision of keeping a fixed value of the inferior quality level (Cf). After the first repair (Tr1), the superior level (Ci1) reaches the value Ci2 , the value (Ci2) being reached through the second repair. Thus, a cumulative increase of the value of infrastructure parameters (Ci3>Ci2>Ci1) takes place. The increase is directly proportional with the volume of additional investments. As an indirect effect, increasingly higher values of the lifecycles (P1r3>P1r2>P1r1 are) registered.
The situation presented in this case is disadvantageous from the financial and economic point of view.. Despite the fact that the lifecycles are longer, the costs necessary for the modernization operations are correspondingly higher as the quality level resulted through repairs increases. In fact, the necessary investments increase from one stage to another. There are situations in which the cumulated increase of the financial effort supported by the infrastructure manager is not paid off by the positive effects of the increase of the quality level or lifecycles. In this case, the adequate measure is the consecutive increase of the inferior value of quality (Cf). The graphical presentation of such a strategy is shown in figure 20.

The financial effort necessary for a strategy similar to the one in figure 20 remains constant and the relations between the presented parameters are:
Ci3>Ci2>Ci1 ,  Cf3>Cf2>Cf1  ,
and      Pr3=Pr2=Pr1.
Through cumulated additional investments that increase the quality level of railway infrastructure, the possibility of occurrence of speed or tonnage restrictions and limitations is considerably avoided. Thus, the negative effects generated by speed restrictions and limitations are eliminated.
A particular case that demands separate approaches is the rehabilitation of Bucharest- Constanta railway section (part of the Pan-European Corridor IV). These works have encountered financial and technical difficulties. Thus, delays in the completion of the works appeared.
Due to the lack of efficient strategies and tactics for a staged completion of works, taking into account the fact that works have been carried out under traffic during the entire period of the project, passenger trains on Bucharest – Constanta route have registered travel times of approximately 5 or 6 hours. The impact on passengers (especially during the summer periods) is hard to quantify. Most of the passengers have shifted to other transport systems or have chosen different seasonal destinations (more accessible).
One of the particularities of the transport demand is the fact that the “shift” of passengers and freight belonging to the client (for freight transportation) from a system to another can be asymmetrical and irreversible. In particular situations, even after the completion of ample rehabilitation works, the transport system no longer recovers loss and the attractiveness registered during  works. Moreover, things are complicating progressively when problems or functional deficiencies (railway infrastructure thefts or inappropriate maintenance) occur immediately after the rehabilitation process. In case of intensive exploitation of the infrastructure sections, the dynamics of transport demand can be partially irreversible, while the attractiveness is difficult to restore – this aspect depends on modal competition. The importance of the aspects mentioned above results from the fact that the railway main line 800 provides direct connection between the capital and the Port of Constanta (the largest Black Sea port and the eighteenth in Europe) together with the Port of Mangalia. For a more complex observation, this railway line connects all the states from Western Europe with the mentioned ports, and further with the freight transportation lines to  and from Middle East, the Caucasus and Central Asia. We refer to the so-called Wider Black Sea Area, whose stabi-
lity and security also depend on the efficient operation of the freight transport network for basic products (oil, fuel and other raw materials). Moreover, direct connections between the capital and certain industrial and military facilities located in the area of the Black Sea coast (energy hubs located on the coast, freight terminals, Constanta and Mangalia shipyards, installations for the extraction and processing of petroleum/natural gas from the coast’s northern area, the military facilities located in Babadag and Mihail Kogălniceanu, fuel and oil deposits, refineries, etc.) are provided. Measuring 310 km, Constanța – Bucharest – Ploiești railway provides an efficient connection (mostly in alignment and without gradients) between the loading/unloading/storage facilities located on the Black Sea coast and the complex of oil refineries located in Ploieşti area.

1. Strategy elements on railway infrastructure modernization

The technical condition of the railway lines represents an important factor for the functioning of the entire conventional railway system. As presented above, there are complex relations between the decisions concerning the financing level of certain categories of works and the medium and long-term social\economic effects.
For such a transport system, the revenue\financing sources can be focused on various development directions. The adopted options generate specific effects that depend on several factors.
Whether we refer to infrastructure operation or management, the structure responsible with the strategy and planning within a railway system managing authority has the role to distribute funds as efficiently as possible.
Hereinafter, the financing algorithms for investments in the railway sector will be
analyzed, classified in different types of management and decision structures.

1.1. Holding railway management

The holding management is an efficient solution adopted in some highly developed states, with efficient policies and strategies in the railway sector. The main characteristic of these organisation structures is that both the infrastructure managers as well as the operators (passengers and freight) are carrying out their activity in a single centralized system of logistics\operation financing and coordination.

The available funds derived from different sources (specific to that state) are distributed through the strategy and planning department to the main investment sectors.
Observation: References are made only to the investment policies and vectors that aim to modernize the system or to increase the value of specific technical parameters. The funds necessary for the current technological processes and other additional activities are not subject to this analysis.
Such a system of funds distribution is presented in figure 21.

The main financing sources shown in the left side of figure 21 are:
• State subsidies. Assigned through the policies and strategies of the transport authority or Government, according to the executive\administrative regulations of that state. They represent amounts allocated from the state budget to the railway system, the value being calculated according to the technical-economic factors of the holding (train-km, passenger-train-km indicators, etc.). Generally, subsidies are strictly dedicated to the current maintenance of the system (infrastructure and rolling stock). There are situations when after the implementation of certain development programmes, subsidies can be allocated including in the sector of investments. An efficient solution for preventing the introduction of restrictions/limitations as a result of railway infrastructure degradation is to assign part  of the subsidies to modernization works;
• EU funds. This source of financing is practiced predominantly in the EU Member States. The railway system can access funds by participating in investment projects or including particular railway sections in the strategies for the development of pan-European transport corridors. For example the  pan-European Corridor IV (the section on Romanian territory) Curtici – Arad – Brașov – Predeal – Ploiești – Bucharest – Constanța and Corridor IX: Giurgiu – Bucharest– Ploiești – Bacău – Pașcani – Iași section;
• Incomes. They result from the amounts obtained from the sale of tickets and the tariffs for freight transportation;
• Budgetary funds. They represent sources allocated from the state budget, other than subsidies;
• Own funds and assets recovery. We refer to the incomes originating from the sale of assets and fixed\mobile overflow or unused assets. Another variant of effective recovery of assets is the rental or lease on determined periods;
• Rent. The amounts originating from rental payments for the use of various spa-ces of the buildings belonging to the patrimony of the holding;
• Track access charge. Represents an income specific to the railway infrastructure manager, being a charge paid by railway transport operators;
•  Loans. Represent actions that take place while financing ample projects with a necessary budget that exceeds the capacity of financing from other incomes at that time. Banks or various financing bodies (national or international) can be the creditors.

There are also other financing sources.
The amounts are received cumulatively through the economic-management system. Depending on the decisions made, the funds are distributed for investments in the three major areas of activity. We are referring to infrastructure, rolling stock or other investments in associated domains.
In order to achieve an efficient correlation of the priorities for investments, special attention must be paid to the distribution of funds. The overfinancing of infrastructure at the expense of rolling stock creates problems of technological progress in the field of vehicles, with medium-term negative effects.  An unfavourable situation for the railway transport system in general, occurs when an outworn or technologically inadequate rolling stock is used on ultra-modern railway lines. Such a scenario creates the premises for a possibly inefficient (reduced) use of the infrastructure.
In other words, by directing the funds for investments to the opposite direction, railway infrastructure can be left without investment processes (its general quality decreasing in time), while the rolling stock reaches a high technological level. Due to multiple speed and\or tonnage restrictions and limitations, a technically advanced rolling stock operating on a low quality infrastructure would not be efficiently used. In such a situation, the operational regime is deficient in terms of energy.
A similar case is registered in the Romanian railway network. The decrease of financing and investments in railway infrastructure has led to the significant decrease of traffic speeds and the occurrence of danger points that generate speed restrictions (approximately 650 in 2011, with a cumulated length of over 1.500 km). Meanwhile, modern locomotives and wagons were provided to the transport operators.  We refer to investments in modernization works or procurements of new vehicles (approx. 8000 kW power locomotives, wagons and locomotives with maximum speeds of 200 km/h). Unfortunately, as a result of reduced speeds allowed by the network, all these are inefficiently used. The maximum speeds on mainlines and secondary lines have decreased significantly due to lack of funds and delays in current maintenance.
Returning to the theory of distribution of funds, we must mention that scientific research, advertising or lobbying activities (figure 22) represent an important investment sector. The main railway infrastructure managers pay special attention to the three areas mentioned above.

1.2 Independent railway companies (undertakings)

Regarding independent railway undertakings or railway infrastructure managers, financing is similar to that of the holding companies. The differences are registered in the area of the financial distribution process. The options for allocating the funds depend on the specificity of the company’s activity.
For the railway transport operators, investments can be preferentially directed in the areas of traction, wagons, electric\diesel trains, or efficiently distributed towards all the areas of activity (figure 22).
Railway infrastructure managers have the possibility of allocating the investments in different constituent elements (lines, installations, structures etc.) or completing a multidirectional optimal allocation based on technical-economic studies (figure 23).
The algorithms of the distribution of funds dedicated to investments for a railway transport operator, respectively a railway infrastructure manager are shown in figures 22 and 23.

Figures:

engineer

[ by Viorel LUCACI – Expert, Romanian Railway Safety Authority – ASFR
Marian CIOFALCĂ – Head of Service, Romanian Railway Safety Authority – ASFR ]
Share on:
Facebooktwitterlinkedinmail

 

RECOMMENDED EVENT: