OREANDA-NEWS. April 05, 2010. Russian Railways held a conference on using life-cycle contracts in constructing the high-speed Moscow - St. Petersburg line.

The meeting was attended by representatives from the Presidential Administration, the apparatus of the Russian Government, the Ministry of Finance, the Ministry of Transport, experts from the scientific and business communities and European colleagues, such as project managers of high-speed rail in Portugal, France and the Netherlands.

Opening the conference, Russian Railways President Vladimir Yakunin said that "the construction of the high-speed Moscow - St. Petersburg line under a life cycle contract is not only a first for Russian Railways, but also the first project of such scope in Russia."

The speakers at the meeting were extremely experienced in creating high-speed life cycle contracts on behalf of the state, which presented an opportunity to examine and evaluate the experience from the government’s point of view.

The meeting covered three projects, three successful stories and three countries: Holland, France and Portugal, and examined two broad questions:
What is the socio-economic purpose of building high-speed lines and what justification is there for subsidising the cost of infrastructure of high-speed rail on the part of the State, even in the form of payments to the infrastructure provider under the life cycle contract after the construction of the line?
Why are life cycle contracts the most suitable scheme for the construction of high-speed railways?

The European experience of life cycle contracts in high-speed rail was presented by Jan Ochtman, project manager of the high-speed Amsterdam - Brussels line, Gabriel Du Plessis, development director of international projects at French railways, Carlos Fernandez, project manager of the high-speed Lisbon - Madrid line, Rui Sousa Monteiro from Portugal’s Ministry of Finance and Jan van Schonhoven from the Dutch Ministry of Transport.

International experience shows that life cycle contracts can lower costs by 20-40%, attract international financing of up to 50% of the capital cost, effect the transfer of the technical risks to the contractor and carry out the project on time and to high quality standards thanks to the effective motivation of the contractor.

The high-speed Moscow - St. Petersburg line has the following design features:
Length - 660 km
Travel time - 2 hours 30 minutes 
Maximum speed - up to 400 kph
Forecast traffic volume - 42 pairs of trains per day
Forecast passenger volume - 14 million people per annum.

The total discounted social effect of the high-speed project  amounts to 1 - 1.5 trillion roubles. Socio-economic benefits will be more than twice the costs necessary for its implementation.

The effect of introducing life cycle contracts to European standards will result in cost savings of 30-40%.