Prospects and Pitfalls of Public-private Partnerships in Railway Transportation - Theoretical Isues and Empirical Experience

Prospects and Pitfalls of Public-private Partnerships in Railway Transportation - Theoretical Isues and Empirical Experience


G Alexandersson, S Hultén,Stockholm School of Economics, SE


A new high speed rail line connecting Stockholm and Linköping is discussed in Sweden. This paper analyses the advantages and disadvantages of designing this as a PPP-project.


One effect of the regulatory reforms in the transportation sector is that private companies increasingly participate in the investments in new transportation systems. These investments may amount to very large sums in the coming 10-year-period (Estasche & Serebrisky, 2004).
There are several different ways to categorise these projects, but with a common name they may all be viewed as Public-Private Partnerships (PPP). For example, Benett, Grohman and Gentry (1999) describe PPPs as a spectrum of cooperative relations between private and public organisations directed towards the supply of infrastructure services. Some PPP projects may be very long-term, including new infrastructure investments as in concessions and Build-Operate-Transfer projects, while others may be more short-term, concerning reinvestments only ? and sometimes even limited to the task of operating a finished construction.
The overall goal of PPP projects is to find solutions to problems in which the advantages of the private sector (such as financial assets, efficient management, propensity to innovative and entrepreneurship) are combined with the advantages of the public sector (such as social and environmental concern). When done right, PPP projects can be very powerful tools to quickly construct new infrastructure facilities and operate them efficiently. However, experience has also shown that they may sometimes go wrong, creating transportation systems that are inefficient, under-used and loss-making.
In several European countries, steps are taken to invest in the upgrading of old lines as well as in the construction of new railway lines, with the common goal to allow for more high-speed train services. This development is partly originating in the perceived needs of the national railway markets, but it is also an important part of the creation of a more competitive European international railway network. In several current cases, such as the new high-speed line Amsterdam-Rotterdam-Brussels (Van de Velde, 2005), and the Swedish so-called Östgöta Link, PPP arrangements have either been applied or are considered as probable options.
In this paper, we will look into the typology of PPPs, the experience of different PPP arrangements in the transportation sector, and consider the possibilities for PPP solutions to become an important element in the creation of more high-speed railway lines in Europe. The paper is based upon a Swedish report of ours, related to the aforementioned Östgöta Link.
Benett, E., P. Grohman, & B. Gentry (1999), ?Public-Private Partnerships for the Urban Environment Options and Issues?, PPPUE Working Paper Series Volume I, United Nations Development Programme, Yale University
Estache, A. & T. Serebrisky (2004), ?Where Do We Stand on Transport Infrastructure Deregulation and Public-Private Partnership??, World Bank Policy Research Working Paper 3356
Van de Velde, D. M. (2005), ?The Netherlands?, in Calthrop, E. and Ludewig, J. (eds) Reforming Europe´s Railways ? An Assessment of Progress, Community of European Railway and Infrastructure Companies (CER), Eurailpress, Hamburg


Association for European Transport