GloPro Hotspots: Rail

In our latest edition, we shine a light on some of the global rail projects that are progressing through planning and procurement, with some showing greater signs of urgency than others

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With the planet facing a climate emergency, the need to implement low carbon passenger rail and freight transport has never been more urgently required.

The PPP model is increasingly being adopted to successfully deliver new rail projects in a wide range of countries across the world, albeit with varying degrees of urgency.

Let’s start in the UK, where the government is apparently heading in a different direction by faltering on its Net Zero/green agenda, as well as failing to seek private sector assistance for the financing of certain high-profile infrastructure projects (HS2 being a case in point).

However, there are signs that the UK may be pushed back towards using the private sector more for its transport infrastructure projects. According to Rail Partners (the trade association for independent passenger owning groups in the UK), “a reinvigorated public-private partnership [is needed] to get Britain’s railways back on the track to growth”.

With an election looming, most likely next year, there is growing hope that opposition parties may be more open to at least considering new ways to fund rail infrastructure investment.

And there are some signs of positivity: in August, Network Rail and Transport for Greater Manchester agreed a deal to work together on the development of new infrastructure and regeneration. How much this will focus on rail projects, though, remains to be seen, with a lot of Network Rail's activity focused around using surplus land to deliver new housing and other real estate schemes.

Rail Partners also had a pointed remark about the difference between the UK and some of its neighbours: “While European railways are liberalising and seeing signs of a renaissance, our railway risks being left behind.”

Nowhere is that being more actively demonstrated at the moment than in Ireland. While the Dublin Metrolink project has been in formal planning since 2018 (in its latest form, at least), the National Transport Authority (NTA) is now stepping up its efforts to turn plans into reality, appointing a host of advisors in recent years. The NTA’s latest prior information notice seeking a delivery partner for the project signals its intention to move forward with the release of a contract notice in December 2024.

This is something that the market has been watching closely for a long time, and no doubt there will be plenty of interest in the project when it is tendered.

Further afield, Latin American countries are currently leading the way in terms of new projects entering the market, with Colombia emerging as a frontrunner. The Bogota Metro Line 2 project is currently at the shortlist stage, and the La Dorada - Chiriguaná Railway Concession, as well as the Colombian Pacific Railway Line project, both received government approval in recent months.

With recent projects also emerging in Chile, Peru and the Dominican Republic, the rail sector is showing definite signs of growth across the continent.

Brazil has a well established track record when it comes to using PPPs for transport projects, with Sao Paulo in particular looking to the model to deliver a succession of new rail lines and extensions to their metro network in recent years. The latest project to come to market is the Sao Paulo Intercity Train & Line 7 PPP, for which an auction is due to take place on November 28, 2023.

Further north, in the US, two recent projects highlight a trend for using the PPP model to upgrade aging rail infrastructure, including the upgrade of Penn Station and the Rapid Station Accessibility Upgrade Program, which reached financial close in May this year. There is particular excitement over this latter project, with expectations that it could be the first of a major foray into the PPP space for New York’s Metropolitan Transit Authority. All eyes are on the agency to see where it goes next, now that this initial scheme has got over the line.

In Canada, the rail PPP sector is showing little sign of any decline, with several projects currently progressing through the procurement phase, including the flagship High Frequency Rail (HFR) project, the Calgary Green Line Light Rail Transit Project - Shepard Phase, and the Yonge North Subway Extension Tunnelling Package.

This represents a strong pipeline, especially given the negative experiences that the country has faced with some of its larger rail projects. In Alberta, Edmonton’s Valley Line project has been beset by a variety of delays, and although a recent city audit report suggested the authority had “clearly allocated risks, [and] protected the city’s interests”, it has undoubtedly hit the reputation of the model. How much interest these latest procurements can garner - particularly the hugely ambitious, 1,000km HFR - will provide a clear signpost over where the market is in Canada.

Global rail project highlights elsewhere include the San Mateo Railway Project and the Mindanao Railway Project Phase 3, both receiving planning approval in the Philippines, Jerusalem's Light Rail Network - Blue Line, for which a preferred bidder was selected earlier this month, the release of a request for information for the rehabilitated Kuala Lumpur-Singapore High Speed Rail Project, and last but not least, in Greece, the Railway Axis of Northern Greece was approved earlier this year.

These deals are testament to the continued interest in the PPP model for the delivery of new rail infrastructure, almost wherever you look in the world. Often coming with huge price tickets, these schemes are in a global competition for investment, with only a handful of organisations able to bring the cash and expertise to deliver often technically complex projects.

That means any authority considering launching a rail PPP project will need to ensure they are well-structured deals that can attract the investment needed.