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HSL-Zuid opening postponed again

11 Sep 2007

Originally anticipated in October 2006, the opening of the Netherlands' troubled high speed line project has been postponed once more.

THIS MONTH, Dutch Transport Minister Camiel Eurlings is expected to announce a further revision to the opening schedule for the high speed line between Amsterdam, Rotterdam and the Belgian border.

With Ansaldobreda not expected to deliver the V250 trainsets for some time, the NS-KLM High Speed Alliance hoped to launch an interim 160 km/h loco-hauled service in December 2007 (RG 12.06 p779). But at that time the government was still negotiating with HSA over a phased start-up of operations.

In May the transport ministry revealed that the interim service would initially be limited to the northern section between Amsterdam (Hoofddorp) and Rotterdam. Eurlings then had to admit in mid-June that even this section might not be ready for December. Test running is currently underway to commission a section of the line near Rijpwetering which had to be extensively rebuilt following subsidence of the unstable ground.

The principal contributor to the ongoing uncertainty is the decision to ask the E&M concessionaire Infraspeed to upgrade the ETCS Level 2 signalling from Version 2.2.2 as originally specified to the Version 2.3.0 being installed on the Belgian LGV4 south of the border. This has triggered a further cost over-run, currently estimated at around €25m.

Whilst trains could operate using the different versions of Level 2, they would have to drop back to Level 1 for the cross-border transition, and this was not felt to be acceptable. Limiting the interim service to the northern section would allow trains to run between Amsterdam and Rotterdam using Version 2.2.2, while the southern section was being upgraded to 2.3.0. Given that trains have to use the conventional line through Rotterdam in any case, the switch between the two versions of Level 2 could be accommodated here.

Such a strategy would require the upgrading of the northern portion to Version 2.3.0 at a future date – possibly when the V250 and Thalys sets have been equipped to use the line at the end of 2008 or early 2009. But this risked introducing a further element of disruption at the very time when HSA hoped to be building market share.

NS Hispeed spokesman Michiel Jonker believes that with hindsight it would have been wiser to install some form of back-up signalling on HSL-Zuid, as has been done on LGV4 or France's LGV Est-Européenne.

Cost over-run condemned

On June 20, the Algemene Rekenkamer (the Dutch Audit Commission) published a damning report on the whole project, blaming the transport ministry for a lack of co-ordinated leadership during construction of HSL-Zuid. With little experience in the tight drafting of contracts regarding financial and time over-runs, the state has effectively accepted the financial risks of all contract over-runs, says the report.

The Infrastructure Directorate at the ministry wanted train operations to start whilst the ETCS equipment was still being tested. At the same time, the Passenger Transport Directorate was demanding that full access tariffs be paid as soon as the trains started running. HSA has now decided not to run any trains until the ETCS has been fully tested and passed 'fit for purpose'.

AR estimates that delays to the start of services will result in a loss of income to the government from access charges totalling around €222m. This comes on top of the capital costs, which have risen from a projected €3·5bn in the mid-1990s to €6·3bn in 2006. The report predicts that the whole HSL-Zuid project will only break even about 2022.

Consultants McKinsey & Co had already warned in 2004 of significant operating losses due to a 25% to 30% overestimate of passenger numbers. In tendering for the operating concession, HSA had bid €160m/year for the exclusive 15-year contract against two other bids of €100m/year and the Transport Ministry's own estimate that €120m/year would be the highest viable premium.

Some commentators suggest that HSA may have to cut back on the contracted 16 trains/day each way between Amsterdam and Brussels. The operator has not yet made any commitment on NS Hispeed service levels to Den Haag or Breda, although a decision is expected later this autumn.

In any case, Thalys services to and from Paris will not be able to use the line until the trains have been fitted with ETCS on-board equipment.

There are also growing doubts about the punctuality of the high speed trains, which risk being delayed where they have to share tracks with 140 km/h services on the conventional network between Amsterdam and Hoofddorp and through Rotterdam.

HSA has demanded a reduction of €16m a year in its premium payments to compensate for an under-estimation of the running times through Belgium, which it believes will reduce its potential revenue. HSA has yet to agree terms and conditions for operating the 160 km/h interim services, given the ongoing uncertainty over the opening strategy. It is also expected to submit a claim for compensation over the delayed opening of HSL-Zuid for high speed services. This is now expected to be October 2008 at the earliest, against a target date of April 2007 when the concession was awarded.

Furthermore, Belgian infrastructure manager Infrabel may pursue its own claim against the Dutch transport ministry for the delay to the start of services. Until HSL-Zuid opens, Infrabel expects to lose track access income on LGV4 estimated to be worth around €9m a year.

NS has failed to refute a suggestion that HSA could well face bancruptcy, from which it would not be prepared to rescue it. NS would prefer to hand back the operating contract for HSL-Zuid and start a fresh round of tendering (costing around €50m). This, however, may just be a ploy to strengthen its hand in the various negotiations surrounding the reduction of service levels, the reduction in infrastructure access charges, and the operating conditions for the interim 160 km/h trains.