Post by jejozwik on Aug 7, 2008 10:18:16 GMT -8
Private investment in U.S. passenger rail eyed
08.06.08, 12:24 PM ET
United Kingdom - By John Crawley
WASHINGTON (Reuters) - Congress could soon nudge the door open to private investment in U.S. passenger rail, once abandoned as a money loser but now drawing attention with ridership increasing and federal subsidies expanding.
A provision in a bill to continue subsidies for national provider Amtrak would direct regulators to seek proposals for designing and operating high-speed rail between Washington and New York.
Proponents believe halving the nearly four-hour trip would more closely rival trips by air and make downtown-to-downtown trains more attractive to business travel -- and outside investment.
If the response is positive, the government would consider a pilot program in the Northeast and weigh options for investment in other rail projects.
Rep. John Mica, a Florida Republican and architect of the plan, said in an interview that he has met with U.S. and international finance interests and transportation companies to gauge their views.
"They (investors) are watching to see what Congress will do. If we open the door and don't put too many impediments to competition, you could attract significant investment," Mica said.
Companies that participated in a roundtable on high-speed rail hosted by Mica, or gave him promotional materials, include Virgin Rail, a unit of Virgin Group, and Germany's Siemens (nyse: SI - news - people ). Virgin Rail is in a partnership to run service in Britain while Siemens is a global manufacturer of high speed trains.
There is some resistance in the Senate to Mica's plan, which is a cornerstone of rail legislation approved by the House, but not included in a similar Senate bill. Negotiators from both houses will address the matter in September but it is unclear if a compromise will emerge.
Congress is proposing subsidies of between $2 billion and $3 billion for five years, up from $1.2 billion. This would allow the railroad to address pressing capital needs like replacing 100-year-old electrical systems, switches, and tracks on the Northeast corridor that it owns. It would also permit Amtrak to pay down debt.
An upgrade of the flagship Boston-New York-Washington line to lower costs and improve efficiency could boost Amtrak's woeful balance sheet and make that part of its business more attractive to investors, proponents say.
Amtrak spokesman Cliff Black said the railroad is open to private interests, but so far a profit scenario "has not presented itself." Other experts also say no successful passenger railroad can pay for itself.
Amtrak was created by Congress in 1970 as a for-profit corporation from the remnants of dying private railroads to ensure some service as a public benefit. Amtrak perennially loses money although it has received more than $15 billion in subsidies. An attempt by Amtrak to wean itself from operating subsidies failed several years ago and it almost shut down.
For much of this decade, Amtrak supporters and critics in government have wrestled with the future of rail while Amtrak ridership has soared, especially in the Northeast.
A growing number of lawmakers are now willing to reconsider rail service options with gasoline prices high, airports congested, and federal resources strained.
Louis Thompson, a former World Bank rail adviser, said around the world a number of private rail operators work with governments, which primarily coordinate infrastructure and support unprofitable routes that provide a public benefit.
Private investment has enabled high-speed service in Germany, Japan and France. Other companies involved in global rail include Alstom of France and Montreal's Bombardier Inc.
Thompson said investment in the United States could follow the overseas model, although areas of responsibility could be different, and support would be needed from major states that "have the population and wealth."
To make it work, Thompson said, "You have to have the right kind of agreement between public and private sector; government has to be prepared to pay for the services it demands."
Outside the Northeast corridor, Amtrak's trains travel across freight lines that are privately run and owned. Experts agree any expansion of passenger service to involve private operators would require cooperation from the freight companies.
California voters this November will consider $9.5 billion in bond financing for the first phase of a high-speed line linking Los Angeles and San Francisco. Planners envision some private investment in the $40 billion project but the state would build and run the train.
The federal government provides operating subsidies directly to Amtrak but it also has programs that offer loans, loan guarantees, and lines of credit that can be used to help finance rail investment. (Editing by Tim Dobbyn)
08.06.08, 12:24 PM ET
United Kingdom - By John Crawley
WASHINGTON (Reuters) - Congress could soon nudge the door open to private investment in U.S. passenger rail, once abandoned as a money loser but now drawing attention with ridership increasing and federal subsidies expanding.
A provision in a bill to continue subsidies for national provider Amtrak would direct regulators to seek proposals for designing and operating high-speed rail between Washington and New York.
Proponents believe halving the nearly four-hour trip would more closely rival trips by air and make downtown-to-downtown trains more attractive to business travel -- and outside investment.
If the response is positive, the government would consider a pilot program in the Northeast and weigh options for investment in other rail projects.
Rep. John Mica, a Florida Republican and architect of the plan, said in an interview that he has met with U.S. and international finance interests and transportation companies to gauge their views.
"They (investors) are watching to see what Congress will do. If we open the door and don't put too many impediments to competition, you could attract significant investment," Mica said.
Companies that participated in a roundtable on high-speed rail hosted by Mica, or gave him promotional materials, include Virgin Rail, a unit of Virgin Group, and Germany's Siemens (nyse: SI - news - people ). Virgin Rail is in a partnership to run service in Britain while Siemens is a global manufacturer of high speed trains.
There is some resistance in the Senate to Mica's plan, which is a cornerstone of rail legislation approved by the House, but not included in a similar Senate bill. Negotiators from both houses will address the matter in September but it is unclear if a compromise will emerge.
Congress is proposing subsidies of between $2 billion and $3 billion for five years, up from $1.2 billion. This would allow the railroad to address pressing capital needs like replacing 100-year-old electrical systems, switches, and tracks on the Northeast corridor that it owns. It would also permit Amtrak to pay down debt.
An upgrade of the flagship Boston-New York-Washington line to lower costs and improve efficiency could boost Amtrak's woeful balance sheet and make that part of its business more attractive to investors, proponents say.
Amtrak spokesman Cliff Black said the railroad is open to private interests, but so far a profit scenario "has not presented itself." Other experts also say no successful passenger railroad can pay for itself.
Amtrak was created by Congress in 1970 as a for-profit corporation from the remnants of dying private railroads to ensure some service as a public benefit. Amtrak perennially loses money although it has received more than $15 billion in subsidies. An attempt by Amtrak to wean itself from operating subsidies failed several years ago and it almost shut down.
For much of this decade, Amtrak supporters and critics in government have wrestled with the future of rail while Amtrak ridership has soared, especially in the Northeast.
A growing number of lawmakers are now willing to reconsider rail service options with gasoline prices high, airports congested, and federal resources strained.
Louis Thompson, a former World Bank rail adviser, said around the world a number of private rail operators work with governments, which primarily coordinate infrastructure and support unprofitable routes that provide a public benefit.
Private investment has enabled high-speed service in Germany, Japan and France. Other companies involved in global rail include Alstom of France and Montreal's Bombardier Inc.
Thompson said investment in the United States could follow the overseas model, although areas of responsibility could be different, and support would be needed from major states that "have the population and wealth."
To make it work, Thompson said, "You have to have the right kind of agreement between public and private sector; government has to be prepared to pay for the services it demands."
Outside the Northeast corridor, Amtrak's trains travel across freight lines that are privately run and owned. Experts agree any expansion of passenger service to involve private operators would require cooperation from the freight companies.
California voters this November will consider $9.5 billion in bond financing for the first phase of a high-speed line linking Los Angeles and San Francisco. Planners envision some private investment in the $40 billion project but the state would build and run the train.
The federal government provides operating subsidies directly to Amtrak but it also has programs that offer loans, loan guarantees, and lines of credit that can be used to help finance rail investment. (Editing by Tim Dobbyn)
story link