EBI Funds
For the Railway Infrastructure

The achievement at continental scale of certain operation networks of high performance represents a key-component for the integration and for the increase of the economical dynamism in Europe. Several challenges that are implying this action aim the provision of the free circulation of the goods, of the passengers and information, as it is stipulated in the Treaty from Rome in 1957, in the perspective of balanced regional developments and of the preparation f for the EU enlargement. The portfolio of the European Bank for Investments, extremely elastic, includes the "classical" projects of road, railway infrastructure, water supply etc., as well as projects regarding the rural development.

The financing issue of the investments from the railway infrastructure has led to the adoption of a very courageous policy aiming the achievement of an harmonized European railway system, able to support the economical needs. The ambitions in this respect announced by the EU states are real and demonstrate that in Europe is promoted today a policy of transports meant to return to the railways the due importance.
This has led to the increase of the investments efforts of EBI (the financial unit of EU) especially in the favor of the high-speed lines and of the trans-European network (TEN) and, also at the orientation of the investment funds of the bank to the development of certain intelligent transport systems.
Still, up to the present time, in spite of the declared political objectives, the good intentions have been hindered by the lack of investment funds.
On the other hand, the French railway network has confronted with a virtual financial saturation, resulted from the simultaneous implementation of the investments in the maintenance and the rehabilitation of the infrastructure and of the high-speed lines. In this situation, the only solution consists in gradually gathering funds and financing the projects planed for the high-speed lines ( Lyon- Turin, Perpignan - Figureras) separated by the ones for the crowded lines necessary to be engaged in the following 5-10 years.
Unquestionably, the European railway system is facing a great change. Which recourses are provided almost everywhere, on medium and long term. The levels of transparency and attractiveness - especially from the dynamism and efficiency point of view - are sufficiently credible in order to attract a large number of investors from the private sector.
In these circumstances, there has been reached to the conviction that EBI should play a pivot role in the financing of the great projects for the European transport infrastructure, especially in the railway system. Starting with 1994, when, at Espen, the Council of Europe has adopted the trans-European network (TEN) and has drawn up larger lists of priority infrastructure projects, EBI has confirmed as primary source of funds for these investments. The Bank has been involved in the financing of all the TEN projects related to the priority energetic infrastructure programs and transport found in development (including TGV, in the eastern Europe, and the section of the corridor PBKAL from Denmark, in 2001). In the last five years it has provided important funds for major projects of infrastructure at European scale.
Concretely, in the last decade, EBI has massively made its contribution to the development of the railway network from Europe with TGV lines )in France, Belgium, Holland, Great Britain, Spain and Italy) or with conventional lines and at the provision of the rolling stock - in Great Britain, Sweden, Finland, Ireland, Italy, Greece, Portugal and in other ten countries from the Central Europe. The railway competence of the financial efforts of EBI from the last five years is compared with the package granted for the road sector in the same period of time.
The role played by EBI in the provision of funds is permanently extended far out the border of EU. Indeed, as a consequence of the political course established at the Pan-European Conference of the Transports Ministers, through the delivery understanding from Creta (1994) and Helsinki (1997), the Bank has blocked 40% of its resources meant for the communication projects of the candidate countries - the modernization of the infrastructure technique and the rolling stock from the ten countries included in the pan-European corridors.
EBI could have such an important contribution for the support of the freight traffic on the European infrastructure if there has not been promoted an equitable orientation in the financing of these projects which requires important funds, a technical inclusion which financial efficiency is strongly berthed in time and takes into consideration "the effect of the network". Besides making available its important financial capacities on very long term (25 years), the Bank is able to improve the financial environment of the projects by a pre-financing and reimbursement conditions, adapted to the investment cycle, taking into account the preliminary studies, by promoting a financial engineering which would allow the sharing of the risks with other investments and the attraction of other banking sources or of the European subsidies in order to build efficient actions.
This range of products - which can be materialized by loans, guarantees and own funds contribution, expresses the entire dimension in project resulting from the public- private partnership structures (PPP), EBI involving in the promotion of numerous such partnerships in the transport field. Here we can quote the most significant railway projects, as well as London - the Tunnel under the English Channel (CTRL); the main east-western coast line of Great Britain, link with Oresund from Holland, serving the Arlanda Airport from Stockholm and various rolling or hauling stock contracts for the European Union and for the countries found in development stage.
Based on the decisions adopted within an important colloquium organized by EBI at Strasbourg on February 2000, the orientations of the European Union in point of transports have been recently redefined. A second White Chart of EC (adopted on September 2001) alleges the necessity of a re-balancing between the road and railway traffic in the context of international engagements of the Union, pronouncing itself in the favor of the a sustainable development. The chiefs of the states and governments reunited in the Council of Europe at Barcelona (on March, 2002) have reached several conclusions referring to the Transport European Network (TEN), among which the need to establish a new list of priority projects, concomitantly with the revision of the subsidies package meant to sustain them; this imposes a better use of the existing networks emphasizing the interoperability and the interconnection etc.

In this framework, in the nest years, EBI will diversify the actions after three priority axles:
- the endowment of the European territory with the projects in the non-developed areas. In this respect, there will be room for the achievement of the mega-structures in the peripheral regions that are less developed of the Union, in the countries from Central and Oriental Europe and Balkans area ( the Corridor IX, as a priority) as well as the extension of the TEN in the partner countries from the southern and Oriental side of Mediterranean Ocean;
- the befriending of the railway transport projects meant to reduce thee congested areas, in order to decongest the main traffic axles of the European network. This involves a succession of works, as: the provision of the B+ gauge, redefining of the signaling, the achievement of the avoidances or the modernization of the marshaling yards, which have as special vocation the reorientation of the traffic from the road to the railway, especially on long distances: for example, the File of Meridional freight traffic (Belgium - Pas de Calais - Italy - Spain), the connection of the European harbors where they are providing services and the so-called harbor (the detour N/E of Paris, the Steel Rhine etc.) or the development of the of the border points (Moulhouse, Pont de Kehl etc.);
- the development of the intelligent administration of transports. By the design and - research of small innovative businesses in transports should provide the achievement of an important effort of investments in this respect. It is about the improvement of the performances of the logistic chains by watching the changes in real time, the accelerated administration of the time in the marshaling yards, the development of the intermodal equipment, and also about the increase of the exiting infrastructure efficiency through the provision of the best technical performances and for the maintenance of the rolling stock (especially, the hauling stock), of signaling and interoperability.
These kinds of projects conjugate three domains in which the fundamental and applicative researches have played a central role: the technological information, the telecommunications, and the electronics. In this respect, there should be revealed that, based on the decisions of the Council of Europe from Lisabona (March 2000), within the program named Innovation Initiative 2000, EBI invests in these fields which will allow to stipulate the banking loans - with risk sharing, if it is necessary - for the great companies, as well as its own funds and guarantees in the favor of the small innovative businesses.
Lately, EBI has sustained not less than 12 development-research projects, are headed to the telecommunications, the filed where EBI collaborate at putting into operation of Galileo project, for the coordination through satellite of the navigation, the project that is aiming to play an important role in the administration in due time of the transports.
There cannot be neglected the importance of the small projects in the efficient operation of the pan-European transport networks; this one as a client of the respective networks, as consumer, and also as programmer of the innovations. In this respect, EBI and EIF subsidiary (European Investment Funds) specialized in the capital risk and guarantees, plays a fundamental role in the improvement of the financial sustainability for the projects. Almost 100,000 of small dimensions investments among which several hundreds in the logistic field and of the intermodal equipment, have taken advantage of the concurs of the Bank and of the Fund 2001.

EBI, on …the railways
In the financing of the projects aiming the railway transport in Romania, European Bank for Investments has involved starting with year 1997, once with the crystallization of the first pre-feasibility studies for the main sections with the most intense traffic, named pan-European transport corridors, which make the link between the west-European networks (TEN) and the one of the east-European countries, and further on with the Middle East and Asia. The first Romanian projects financed by EBI have been referring to the stability of the railway infrastructure on Bucharest - Brasov railway section, the section with the most attractive traffic values for financing.
A very important aspect for the implementation of a project of such a span refers to the procedures put into practice and to the responsibilities of its "actors", which are the financing party and the beneficiaries.
The most important elements in the evaluation and the approach of the investment measures are:
- judicious programs of all the stages of the project, rigorously defining the allocated human resources, their responsibilities and the duration of the stages ( in optimistic and pessimistic versions);
- the definition of all technical requirements, according to the priorities, and the establishment of certain minimal and maximal rates which offer decisional elasticity during the unfolding of the project;
- the deep knowing of the field, by performing topographical-geographical studies and expertise, the key-elements that are defining the starting points, the base where there is built the work.
Following these stages there are crystallized in defining documents, as well the pre-feasibility and feasibility studies, which are the "birth certificates" of the project, based on which between the Bank and the Beneficiary there is established the "foundation" of every co-financed project: the loan agreement. The EBI policy in point of procedures (extremely pragmatic, otherwise) traces the defining milestones, "the rules of the game", attributing to the beneficiary the responsibilities for reaching the proposed performance parameters, therefore being established the ideal balance between the procedures and the assumption of the responsibilities.
The requirements that have been formulated by the Bank in the loan agreement are the following:
- the assignment of a team, reunited within the Project Management Unit, able to administrate all the stages of the implementation;
- the election by international auction of a consultant who will monitor the implementation of the project by respecting all the procedures;
- the elaboration of the auction documents according to the international practice and the election of the contractors through international auction (public, opened), with transparent and rigorous procedures;
- the implementation of the project so that to be fulfilled all the technical and performance parameters that have been initially established; and the project should produce the stipulated benefices.
The modalities for the achievement of these desiderates are established by permanent contract between the beneficiaries of the loan and the specialists of the Bank, being aimed the responsibility of the beneficiary in the administration of the eligible resources of the projects.
Therefore, there can be said that this collaboration represents a real schooling for the ones that are involved in, imposing a permanent effort for the adjustment of the project route in comparison with the reference line initially established, a permanent monitoring of all the parameters which could create various "skidding" with technical or financial consequences, causing delays. These require an extreme procedural rigor, not being allowed derogation from procedures of the commercial and the contractual and financial administration, a maximal responsibility in the election of the ways for transposing into practice of the project.
Reviewing the way in which there have been performed all these stages within the rehabilitation project of Bucharest - Brasov railway section, there can be emphasized the following aspects:
- the extremely rigorous unfolding of all the elements related to the contractual and economical administration by the Project Management Unit, in close collaboration with the consultant, Transurb - Tuc Rail, elements transposed in performance parameters of the project in point of the physical and value advancement, the value overdraft or the "overheating" of the project being only 2.5 % from the initial contractual value, of 210 million Euro, after almost two years of works summing up almost 140 million Euro;
- the provision of the quality of the works which, in the majority of the cases, it is mixed with the requirements stipulated in the technical specifications, the quality being permanently monitored by the responsibility factors within MLPTL - the quality inspectorates in constructions and the Railway Authority;
- the financial unfolding of the of the loan rates and the reporting have permanently kept up with the development of the project.
As we have previously mentioned, an extremely important aspect is the permanent monitoring of all the elements that could provoke the digression of the project from its ideal unfolding. In this respect, there would be a great mistake to say that we have always succeeded to keep things under control; the effects have been permanently minimized, but the causes subsist. First of all, there can be mentioned the difficulties in maintaining the balance between the requirements to make complex works, in a defined period of time through contractual programs and in a finite space (the railway lines), and the natural, defining obligation, of the railway company to provide a traffic with values as high as possible (the main source of incomes), with a fluency closed to the ideal transposed by the timetable. To all these there are also added the inherent technical problems caused by the discrepancies, sometimes natural, and anyway inevitable, occurred between what has been scheduled on the paper, in the technical projects and in the execution details, and the reality in the filed. This fact had a s consequences the occurrence of various organizational problems, which should have been strategically clarified (for example: who, what, when and how has to be done), being necessary the definition of the internal procedures and the level of responsibilities of all those involved in.
Another conclusion that is also reached from this brief retrospective would be that the lack of consideration granted to the above-mentioned factors and the postponement of the resolute decision making for the correction of the negative effects and especially for averting their causes (which, reaching certain proportions, pull some "warning signals" in the procedure system of the bank) can lead to the blockages: loan rates postponements, the lack of payment of the contractors for the works that have been executed, litigation with negative financial consequences, delays, etc.
The project had all these shortcomings going on, but, as we have showing, we can state that up to the present time all the parameters have been maintained to the normal limits, so that the factors that monitor the "board panel" have been forced to stop the project for…overhauls.
Therefore we can conclude that, besides the figures and data, besides the concrete material achievements which lead, to another extremely important gain, this type of cooperation is the accumulation of the certain collective experience as a sum of the individual experiences. Moreover, this collaboration can be considered a veritable "professional certificate" for our company for railway infrastructure: CFR SA is capable to achieve great span projects! And that's because the European Bank for Investments agrees with that, and other financing bodies will allocate funds in the future for the Romanian Railways in order to reach the final goal: the achievement of the interoperability with the European railway network!

Vlad Manu
Oana Branzan