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Project company to support Finnish rail reforms

04 Feb 2019

FINLAND: New line development, transparent access to infrastructure services and the provision of rolling stock for on-rail competition are to be facilitated by a state-owned special purpose company to be formed under plans unveiled by Minister of Transport & Communications Anne Berner on February 1.

The Cabinet Committee on Economic Policy has endorsed the ministry’s proposal to establish a limited liability company to develop the rail sector and promote major projects, under the ownership and control of the Ministry of Transport & Communications. Berner had indicated in August 2017 that the government was looking to open up the passenger rail market to competition, and she reiterated that reform would be a prerequisite for proceeding with large infrastructure development projects.

Berner said the company, provisionally entitled Oy Suomen Rata AB, would be established with an initial capital injection of €100m, with a remit to attract further investment from other partners.

The company would operate through five subsidiaries, of which one will focus on the management and development of railway property. This is intended to facilitate a transparent and non-discriminatory market by giving all operators access to state-owned depots, stations, terminals and maintenance facilities. This will include the important depot at Ilmala to the north of the capital and VR Group-owned stations in the ‘southern Finland urban transport area’.

A second business unit would oversee the procurement of new rolling stock to refresh the country’s ageing fleet and make it available to both VR and other operators. Ownership of the Sm2 and Sm4 EMUs used for suburban services in the greater Helsinki region would be transferred from VR to the new company, similar to the way in which Stadler Flirt Sm5 units are owned by regional not-for-profit leasing company Pääkaupunkiseudun Junakalusto Oy. Around €71m of the state funding is to be allocated to provide seed capital for the rolling stock business.

The other three business units will be responsible for promoting high speed lines from Helsinki to Turku and Tampere and for managing Finland’s involvement in the Rail Baltica corridor linking Estonia, Latvia, Lithuania and Poland.

According to the ministry, majority ownership of the project companies would belong to the state during the start-up phase, but ‘as the planning progresses, the company will negotiate capitalisation and new shareholdings’. It anticipates support from city governments along the routes and ‘other public bodies or publicly owned entities benefiting from the projects’, who could also take an ownership stake.

An initial €10m has been allocated for development of a western high speed line offering 1 h journey times between Helsinki and Turku via Espoo. This is expected to cost around €2bn to build, and could attract up to 1·6 million passengers a year. Another €16m is allocated for the northern route connecting Helsinki and Tampere via the capital’s international airport, which would cost €5·5bn and could carry around 6·5 million passengers a year.

The remaining €2m would enable Suomen Rata to become a shareholder in the Rail Baltica project company RB Rail AS, a move welcomed by Estonia’s Minister of Economic Affairs & Infrastructure Kadri Simson.

‘Efficient rail transport services are necessary to facilitate everyday mobility and expand travel-to-work areas, and are consequently a key contributor to the competitiveness of Finland’, said Berner. However, she added, ‘it is clear that budget appropriations will not suffice to carry out the necessary large-scale investments in railway infrastructure, and that is why new financing methods are needed.’