Fertagus Concession Contract

Fertagus Concession
Contract
2013
•
FERTAGUS is a company part of the BARRAQUEIRO
GROUP that won the public international contest
for the railway exploitation of the north/south
passage launched by the portuguese state in 1997
and began its activity in 1999.
•
The Barraqueiro Group specializes in the design
and implementation of innovative passenger and
freight mobility solutions.
•
Leader in the Iberian suburban and interurban
road passenger transport sector and a benchmark
in rail and light rail operations, as well as an
international road freight hauler, the Barraqueiro
Group is proud of its long history and large
experience, that dates back to its days as a small
bus company founded in 1915.
FERTAGUS
•
It was the first contract in the exploitation of a
public transport service that included passengers
after the split between the offer of transportation
services and the management and maintenance of
the railway infrastructure. Fertagus becomes the
first private operator managing a railway system in
Portugal.
•
The initial Concession Contract was renegotiated
having in consideration the law 86/2003 which
establishes the public-private partnership rules
and began to be applied in December 2005.
In 2010 the contract was extended until 2019,
without compensations by the Government for
the public service provided.
•
FERTAGUS
FERTAGUS is responsible to commercial
exploitation through:
 A contract with Portuguese Government where
are defined high levels of Quality that Fertagus
has to perform
A contract with REFER concerning the use of
infrastructures.
FERTAGUS
Those Quality levels concerns to:
• The railway exploitation - operations;
• Safety and Security;
• Rolling stock management & maintenance;
• South railway stations management &
maintenance;
• Ticketing system;
• Recruitment, training and management of all
people involved.
FERTAGUS Activities
Transportation service in North/South railway
Bus transportation in connection with railway
stations - Sulfertagus
Maintenance service of UQE’s
Management of 6 stations in the south:
Commercial areas management
(121 shops)
Parking management – 8.500 places
Operations I
During the day Fertagus offers 3 trains/hour
(Coina – Lisboa) and every 60 minutes (Setúbal –
Lisboa)
Rush hours (7:00 to 10:00am and 4:30 to 8:30
pm) 5 trains/ hour (Coina-Lisboa), most of them
double trains
Operations II
•
To guarantee the operations,
Fertagus has 18 UQE’s, with
476 seated places and 734
standing places.
•
Time between Setúbal and
Roma/Areeiro is 57 minutes.
To cross the bridge is 7
minutes.
•
The total length of the
commercial exploitation is 54
Km.
•
Commercial average speed is
47,5 Km/h.
Operations III
 148 daily trains
 41 double trains
 UQE Km year 2,2 millions
 229.000 daily places
 I.R 2012– 0,98
 IP3 2012– 0,95
 IP5 2012– 0,98
 IP10 2012– 0,99
Human Resources
Drivers
37
Commercial Operators
87
Traffic Control
8
Exploitation/ Commercial Supervisors
13
Maintenance
19
Security and Safety
1
Staff
25
TOTAL
190
Demand 2012
 Demand – 21 millions
Train tickets revenue – 25 millions
 Total revenue - 30 millions
Revenue per PKM – 0,06862€
Contractual framing
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DL 339/91 of 10/09 – Private companies
access to the railway
DL 104/97 of 29/04 – Reconfiguration of the
railway sector
DL 299-b/98 of 29/09 – Regulation and
control of the sector
Ordinance 1375/95 of 22 – International
public contest for the acquisition of rolling
stock
Ordinance 565 – A/97 of 28/07 –
International public contest for the
exploitation of the public transport railway
service in the north/south passage
27 June 1999 – Signature of the Fertagus
Concession Contract
Renegotiation of the contract in 2005
Contractual extension of the contract in
2010
Initial Contract
(1999-2029)
Initial Contract - 1999
Operations
To guarantee
UQE’s.
the operations, Fertagus has 18
Time between Fogueteiro and Entrecampos is 27
minutes and between Pragal and Campolide is 7
minutes, which is a significant improvement for
accessibilities between both sides of Tejo River.
The total length of the commercial exploitation
was 20,99 Km.
Commercial speed was 47,5 Km/h.
Initial Contract
FERTAGUS investment :
• 104,7 millions Euros in rolling stock.
• 39,6 millions Euros with reinforcements in
2003, 2005 and 2009.
• 17,4 millions Euros in commercial equipment,
ticketing system and maintenance installations
Initial Contract
Main Contract rules
Quality minimum levels
FERTAGUS has to guarantee:
•
the realization of 98% of the foreseen trains
(a train with more then 10 minutes delay is
considered not done)
• 95% of the foreseen trains arrived with less
then 3 minutes delay.
• 96% of the foreseen trains arrived with less
then 5 minutes delay.
• 98% of the foreseen trains arrived with less
then 10 minutes delay.
Initial Contract
Main Contract rules
Sharing the risks
Risks are shared using a system based on traffic
level bands.
Reference band - Fertagus pay a fee to the use of
infrastructure (TU)
Superior Band - fee = TU + a
Inferior Band -
fee = TU - b
Inicial agreement– first years
1999 - 2002
800.000.000
PK1
700.000.000
PK2
600.000.000
500.000.000
PK3
400.000.000
PK4
300.000.000
PK real
200.000.000
100.000.000
0
1999
2000
2001
2002
2003
PK1 = Maximum limit of superior traffic band
PK2 = Minimum limit of superior traffic band
PK3 = Maximum limit of inferior traffic band
PK4 = Minimum limit of inferior traffic band
2004
If the real volume
traffic < PK4
Concessionaire:
• Exceptional
redemption
• Renegociation
Inicial agreement– first years
1999 - 2002
If the real volume traffic
> PK4 in 2002
800.000.000
PK1
700.000.000
PK2
600.000.000
500.000.000
PK3
400.000.000
PK4
300.000.000
PK real
200.000.000
100.000.000
0
1999
2000
2001
2002
2003
PK1 = Maximum limit of superior traffic band
PK2 = Minimum limit of superior traffic band
PK3 = Maximum limit of inferior traffic band
PK4 = Minimum limit of inferior traffic band
2004
Ways of compensation:
• Extension of the
deadline of the
concession
• Extraordinary rise in
Transport Fares
• Direct compensation
by the Government
• Combination of the
above ways of
compensating
Renegotiation - 2005
Historical context
• Legal Regime for PPPs
– Law 86/2003, of 26 de April
• Nomination of Monitoring Commission
– Joint Ministerial Order 699/2003, of 18 June
• Beginning of renegotiation process
– September 2003
Renegotiation - 2005
Grantor proposal
•Concession períod of 5 years
• Implementation of operational leasing structure
• Payment by the Grantor of the costs to circulations of low
utilization, imposed to the Concessionaire
•Revenue sharing between both from:
-Demand higher than planned
- Over revenue after fair return on invested capital
Renegotiation - 2005
Grantor proposal
• Extension to Pinhal Novo
• Assumption of risk related to railway operation by the
Concessionaire
• Priccing freedom between -10% and +15% real to BTM 2003
• Contractual autonomy of the bus service
• Reducing the financial effort of the State on railway activity
through margin necessarily positive, of the complementary
activities
Renegotiation - 2005
Proposal appreciation by the Concessionaire
• Risk increase for Fertagus
-Maintaining the risk profile concerning the conditions
of exploitation
-Demand risk
-Increased risk in the quality of service
-Sharing higher revenue in respect of expected in
Base Case
• Financing of railway activity, but not the bus activity, by the
complementary activities
Aggravating factors:
• Service Extension
• New investments in ticketing system
• New Stations
• New service of Metro Sul do Tejo
Risk regime/ Up-Side share
Total responsability of Fertagus in what
concerns the Concession risks
Finantial compensations on part of the state
previewed only in the Contract
If annual real railway revenue > previewed
revenue
Excess divided between both parties
75% Fertagus Variation until to 5% 25% State
25% Fertagus Variation up to 5%
75% State
Use of the Infrastructure
The access and use of the infrastructure obey to the
displayed in the infrastructure use contract and in
the REFER network directory
The company pays to Refer for the use of the
infrastructure the prices previewed in the REFER
network directory connected to the essential,
additional and auxiliary services
If annual variation, positive or negative of the
essential service price > 3% than the price
registered on financial model for that year (prices
2005)
The state or the company should pay to the
other part the sum corresponding to the
variation above or bellow 3%
Contracts with Refer
Annex 4 – Concession Contract for the exploitation of
stations, Interfaces, parking in the south stations (From
Pragal to Penalva).
Annex 9 – Use Contract for the infrastructure of the
North/South passage including :
• Concession Contract for private use of the Coina
maintenance depot
• Agreement for the access of the company to Centralized
Traffic and Infrastructure Control (CTC).
• Agreement for access to electrical energy for traction
• Agreement for protocols of communication systems and
access conditions to the communications network
• Principles for the implementation of a monitoring system
of performance and rules to define a performance
improvement regime
• Insurance
Quality of the supply
The company should:
Regularity rate:
To keep operational human resources and
necessary material in order to at least
98% of the service presented in our
schedule is accomplished
Punctuality rate:
The service must present:
95% of circulation delayed in
destination =/< 3 minutes
96% circulation delayed in
destination =/< 5 minutes
98% circulation delayed in
destination =/< 10 minutes
Penalty regime (Annex 14)
Contractual framing
Other aspects of the new Contract which
increase the risk for the company:
Change of the exclusivity regime
Contribution of the accessory activities
profits to the financial re-balance
Aggravation of the penalty sum and end of
incentives
Contractual framing
Main changes:
Initial Contract
Renegociated Contract
Prices
95% inflation rate
Conditioned free prices
Compensation of the
public service
Variable compensation
having as reference
passengers kilometers
Fixed compensation for the
concession period
Commercial Risk
Concession end
Rolling Stock financing
2029
MLP Loan
Up-side share
2019
Operational Leasing
Contractual framing
 This way the company takes the operation
risk and assumes the risk concerning with
demand and rolling stock availability in a
context of several operational level costs,
risk of inflation and high penalties.
 The higher occupation rate allowed is now
lower aggravating the operational risks
associated with the extension to Setúbal
with the exact same rolling stock we
previous had.
 Fertagus has 18 UQE’s with 17 daily
performing commercial service even in a
phase in which heavy maintenance
operations in the rolling stock are taking
place.
Contractual framing
State risks:
Need of more rolling stock
Extension of the railway service to Gare do
Oriente and/or Praias do Sado
Opposition of the state to the change of
prices performed by the concessionaire
Extraordinary variation on prices of essential
services to the use of the infrastructure
Unilateral changes of the state to the agreed
conditions
Happening of extraordinary events
Rescue or abduction of the Concession
2010 - Quality Services
Ensure the quality in the global service
 From 17 items evaluated annually by our
clients, none had a negative score.
Considering our Client Satisfaction Inquiry,
we achieved a level of 4.5, on a 1 to 5 scale
Demand growth
17,5
17,8
19
20,6
21,4
22
22,6
22,5
23
14,8
11,4
3,5
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
96% of our clients want to use the train in the future
20% of demand use the train for internal trips in
Setúbal peninsula.
With 10 years of operation, we are in
the right way.
 Sustainability demand growth
 High levels of efficiency
 Quality services:
In November 2002, Fertagus was certified by APCER,
Certification NP ISO 9001: 2008
In March 2007, Fertagus was certified by APCER,
Certification NP 4397:2008 (OSHAS 18001: 1999) :
Occupational Health and Safety Management System
Efficiency levels
The cost percentage cover by the operational revenue is
95% (excluding compensations for public service
obligations).
5 years period (2005/2010)– Total compensations for
public service obligations: 57,6 millions Euros
Upside delivered to the Government (2005/2010): 11,7
millions Euros
Contract Renewal 2011-2019
Agreement – Headlines
 Renewal: 2011 - 2019
 Non public service compensation
 Non risk of inflation rate fluctuation (Fare
increases, upside & model net profit share)
 Profits and costs evolution, in general,
according inflation rate
 Fare increase (train, bus and park): 1% above
expected annual inflation rate per year
 Passengers increase:
-train and park: 1% (2011_15) / 0,5% (2016_19)
-bus: 0% for all period
Agreement – Headlines
 Upside share: 75% Government/ 25%
Fertagus of the difference between real and
financial model train ticketing revenues
 Costs risk: 100% Fertagus, except railway
Infrastructure use
 Extraordinary increase of railway Infrastructure
use balanced with extra fare increase
 Financial model net profit share 2017_19
50% Government/ 50% Fertagus
 Investment 2011 – 2019: € 2,8
million
- ticketing system
- IT
- infrastructures
- maintenance
€ 1,6 million
€ 0,2 million
€ 0,5 million
€ 0,5 million
March 2013
THANK YOU
FOR YOUR
ATTENTION