Draft:Railway concessions in France

The railway concession is a fairly old system where the construction, operation, and management of a railway line, whose ownership remains with the public grantor, typically the State, are delegated to a private partner. This contractual system is similar to the public service concession, but differs somewhat from partnership contracts (PPP) and should not be confused with railway franchises, which concern the operation of transport services on a railway line.

Principle

The State owns the railway infrastructure, either directly or through one of its public entities, as is the case in France with SNCF Réseau. If it lacks the technical expertise, human resources, or financial capacity, the infrastructure manager may call upon a partner better suited to the task. The awarding of a concession by the granting authority must involve a call for tenders and a competitive bidding process. Candidates are typically consortia of companies from the construction industry or railway sector, such as Vinci, Eurotunnel, or Veolia Transdev, partnered with the banking sector. The various candidates compete based on the bids they submit to the granting authority. This is a monopsony, with a single buyer facing multiple suppliers. The concession is then awarded to the best bid through a contract with precisely defined terms (amount of public subsidies, duration of the concession, risk-sharing, etc.). This process eliminates situations of economic rent arising from a natural monopoly.

The railway infrastructure manager makes its railway property available: it transfers all the patrimonial rights and obligations of the owner, except for the right of ownership and the right to alienate. The economic risks are then borne by the concessionaire, though a risk-sharing arrangement may be included in the concession contract. Financing may be renegotiated during the concession or at its expiration. The concession contract may set a profit ceiling for the concessionaire, beyond which the surplus is transferred to the public grantor (State, SNCF, etc.). The concessionaire is obligated to open its line or section of line to all trains at the same price, though it may prioritize its own trains over those of competitors. If the company undermines competition, the concession may be revoked before the contract’s end, and it may be liable for damages.

Difference between concession and partnership contract

In the context of a concession, the private operator (the concessionaire) bears the majority of the project’s risk. This financial risk stems from the “traffic risk,” as the concessionaire is directly remunerated by users, in this case, the railway undertakings that use the conceded line with their trains in exchange for tolls. The concession contract may also include the operation of transport services, in which case the concessionaire and operator are the same entity, which must still bear the risk of train ridership.

The partnership contract differs from the concession in the way risks are shared between the public and private sectors. In this case, the risk-sharing logic aims to be optimal, and the traffic risk is borne by the public sector. The private consortium is remunerated by the public contracting authority through rents based on predetermined performance criteria. Thus, in the context of partnership contracts signed by SNCF Réseau, the public company collects tolls for train operations and pays regular rent to the private operator responsible for constructing, operating, and maintaining the infrastructure.

Railway concessions in France

Historical concessions before the 1938 nationalization

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Current French concessions

• The Provence Railway concession

The Nice–Digne railway line was initially conceded by the law of 29 July 1889, declaring it of public utility and granting a permanent concession to the Compagnie des chemins de fer du sud de la France. In 1972, by decree, the State again conceded the line to the Syndicat mixte Méditerranée-Alpes (Syma) for a 99-year term. The Syma includes the relevant local authorities, namely the Provence-Alpes-Côte d'Azur region, the Var department, the Alpes-Maritimes department, and the cities of Nice and Digne. Since 1 January 2007, the Provence-Alpes-Côte d'Azur region has taken over from the Syma, which is set to be dissolved. An amendment to the concession agreement was validated by the Council of State to enable the transfer.

The operation of the line was conceded through a Public service delegation starting in 2005 for a duration of 8 years to the Compagnie Ferroviaire du Sud de la France (CFSF), a subsidiary of CFTA (part of the Transdev group). Since 1 January 2014, the Provence-Alpes-Côte d'Azur region has taken over direct operation through the Régie Régionale des Transports.

• The Trans-Channel fixed link concession

The French and British governments signed a treaty in Canterbury on 12 February 1986, enabling the construction and operation of a fixed link connecting the two sides of the Channel by a consortium of private companies under a concession. This followed the decision on 20 January 1986 to select the “Eurotunnel” project for a double railway tunnel with a third service tunnel. The concession was awarded for a term of 99 years to the concessionaire company, named Groupe Eurotunnel. It was established on 15 August 1986 and includes French and British banks and construction groups. The company is notable for having a significant portion of its capital held by small shareholders.

• The France-Spain high-speed rail line concession

The creation of a high-speed rail link between France and Spain was initiated by the signing of an international agreement in Madrid on 10 October 1995. This agreement laid the foundation for a public-private partnership approach to the infrastructure’s construction under a concession, which was later approved by the French parliament on 21 October 1997 through legislation. The call for tenders for the concession was launched by the intergovernmental commission in September 2001, and the selected consortium, TP Ferro (a joint subsidiary of the construction groups ACS Dragados and Eiffage), signed a concession contract on 17 February 2004 for a term of 50 years. The total project cost was 1.1 billion euros, with public balancing subsidies amounting to 640 million euros, equally shared between the two States. The European Union also contributed 160 million euros to the project.

As per the concession contract, the line was delivered on 17 February 2009, five years after the signing, but due to delays in the Barcelona–Figueres link, the line was put into service on 19 December 2010 with a temporary solution. The inauguration took place on 27 January 2011. In response to the commercial prejudice suffered by the concessionaire TP Ferro, the Spanish government granted it an indemnity of 108 million euros on 6 November 2009 and extended the concession duration by 3 years.

The company was liquidated in 2016.

• The Lyon Saint-Exupéry LESLYS express link

LESLYS is an express tramway line connecting Lyon–Saint-Exupéry Airport to central Lyon at the Part-Dieu station. The Rhône General Council, as the organizing authority for non-urban passenger transport in the department, decided in 2001, in collaboration with SYTRAL, to create a rail link between Lyon and its airport. It was decided that the line would largely share its infrastructure (from Lyon to Meyzieu ZI) with the Line 3 tramway project, following the route of the former Chemin de fer de l'Est de Lyon, owned by the Department. The urban section of the line between Lyon and Meyzieu was built as part of the T3 project, but for the new section between Meyzieu and the airport, the General Council opted for a concession model covering the construction and management of the infrastructure, as well as the operation of the transport service across the entire line.

A consultation for the concession was first launched in 2004 by the Department, but the results were unsatisfactory, so a second one was launched in 2006. Ultimately, the Rhônexpress consortium was selected by the general councilors on 15 December 2006, and the contract was signed on 8 January 2007 for a 30-year concession, with the concessionaire bearing all traffic risks. The Rhônexpress consortium is led by Vinci Concessions (agent) and includes the Caisse des Dépôts et Consignations, Veolia Transport, Vossloh Infrastructure Services, and Cegelec. The concessionaire consortium Rhônexpress then entrusted the operation of the service, starting from its commissioning on 9 August 2010, to the company CFTA Rhône.

With the creation of the Lyon Metropolis on 1 January 2015, it replaced the Rhône Department in the territory of the former Greater Lyon Urban Community. On the same date, the Syndicat mixte des transports pour le Rhône et l'agglomération lyonnaise (SYTRAL) merged with the Syndicat mixte des transports du Rhône and became the sole transport organizing authority for the Lyon Metropolis and the Rhône Departmental Council. SYTRAL became the granting authority for the Lyon Saint-Exupéry express link on that date.

• The Sud Europe Atlantique high-speed line

Following the commissioning in September 1990 of the Atlantique high-speed line between Paris and Saint-Pierre-des-Corps, near Tours, discussions began to extend the line toward Bordeaux. The high-speed rail master plan of April 1992 included a project called LGV Aquitaine to connect Saint-Pierre-des-Corps to Bordeaux. The public debate was held from 1994 to 1995, which then allowed preliminary studies for the Tours–Bordeaux section to begin. The public inquiry prior to the declaration of public utility was divided into two sections: Tours to Angoulême and Angoulême to Bordeaux, conducted in 2007 and 2005, respectively. On 18 July 2006, the declaration of public utility for the Angoulême–Bordeaux section was decreed, and that for the Tours–Angoulême section was decreed on 10 June 2009.

Railway concessions in Europe

In Sweden, since the opening to competition in 1999, 3,596 km of lines have been awarded as concessions to private operators. The remaining 9,792 km are owned by Banverket, the Swedish infrastructure manager. This model is also currently being implemented in England.

See Also

Related Articles

• Public service concession in France
• Railway franchise
• Partnership contract
• History of rail transport in France
• Réseau Ferré de France
• Railway undertaking

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