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Links drive Danish upgrading

01 Aug 1998

Within a couple of years Banestyrelsen will form the key section of an unbroken rail corridor between Scandinavia and mainland Europe. Director General Erik Elsborg told Andrew Hellawell how he plans to expand capacity for growing domestic and international traffic while encouraging both new and established rail operators


SINCE its rather abrupt birth last January, Banestyrelsen has made great strides in adjusting to a rapidly changing industry. Director General Erik Elsborg is steering the organisation into a position where it can drive forward investment in partnership with the transport ministry and rail operators.

The 18 months since Banestyrelsen was separated from DSB has been a very busy time. 'It may seem easy to split apart one organisation, but it is actually very difficult', says Elsborg. Perhaps an indication of how successfull this transition has been is the public profile of Banestyrelsen. 'Most Danes are aware of the split' - this despite the fact that 'when the railway has been a monolith for 150 years it takes time to realise that changes have happened'.

It has been a politically-driven change. 'Politicians want the railway to develop like other businesses - state monopolies will disappear. It's assumed that splitting the railway and getting competition will make it more efficient, and so they see it as a way to increase rail traffic. A large majority (80 to 90% of politicians) support it, so there is strong political consensus.'

Though the first step was the creation of Banestyrelsen, the next was the passing on May 7 of a bill dealing with railway operations, which will open Banestyrelsen tracks for open access operators, and specify useage conditions. The bill envisages deregulation of freight from January 1 1999, and passenger traffic from January 1 2000.

'Even on a European scale it's a liberal approach' says Elsborg. The state will buy socially necessary services from DSB, although 15% will go to tender, and there is spare capacity for new operators to exploit. 'So we will create a private sector quickly.' Denmark already has established local lines, but what about other operators? Top candidates are DB, NSB and SJ who will be keen to link their customers across Banestyrelsen. 'I think we will have transit traffic like the Swiss and Austrians, and I hope we will benefit.'

Charges based on marginal costs

With the operational framework largely in place, how will a charging system be set up, and is there any prospect of following the Swedish model of reducing track charges to zero, or even negative figures? 'We want to go for marginal costs. It's quite logical that if you can't charge road traffic more, you support rail - but I don't know if we will go as far (as Sweden). I do see the possibility of reimbursing freight operators for environmental reasons. If the government decides in favour, then this could be achieved within the present framework, so we could end up charging a round zero.'

'But it's more likely that we will have charges and repayments - taking higher rates where capacity is short, and lower ones where there is spare - so the key transit corridor of København - Odense - Padborg will have higher charges.' Exploiting this corridor fully will be constrained by the bottleneck which the Ringsted new line will remove. 'We are hoping for a decision by the end of the year, as we will need this capacity soon after the Øresund link is opened.'

Where lines are already at capacity, how do you regulate between operators? 'I expect to receive guidelines from the political system - services receiving government subsidy and highly profitable business will get the first call. Within the next five to six years we will face priority problems on part of the (east-west) line. Operators could be unhappy unless we have clear priorities. Even if a new line is constructed, it will still take five to six years to build - so we will still have a problem.'

Finance and investment

Will Banestyrelsen's more independent status give more freedom to source private finance for investment? 'We still have to ask parliament, because we need financing from it, and this is incorporated in our annual budgets.' External borrowing is not permitted as yet, but Elsborg thinks 'it would be a natural thing to look at other ways - and this will probably be the case within 10 years, although the finance ministry would like to keep control to some extent.'

'We have been very active in supporting Freight Freeways as much as we can', says Elsborg. 'From September this year we will open routes from Hamburg into Sweden and Finland. Paths will be put in place with the next timetable, including establishing a one-stop shop.

We have set up 10 paths each way per day to and from Hamburg. Already more than half of these have been reserved, and so we are planning to go to 20 paths each way from October 1. DSB Gods, and the freight divisions of SJ and NSB have formed a joint venture to operate on this route. We look forward to the concept of Terffs - they are the key to opening up infrastructure throughout Europe. I hope the EU will develop initiatives on charging which will promote their development.'

This leads to a point of concern over the different stages of restructuring which European railways have reached - with the Scandinavians now years ahead of their southern neighbours. 'Development of liberalisation in Europe has reached different levels - anti-synchronisation will cause problems for cross-border integration. It's an absolute necessity. I hope the different railways split up according to the Scandinavian model - not necessarily in terms of ownership, but in achieving freedom and impartiality.'

Restructuring in Sweden brought a surge in railway investment - is the same likely to happen in Denmark? 'If you asked me a year ago, I would have said we would follow the Swedish model, but now state financing and the economy makes this unlikely. Time will tell, but I hope we will at least be able to invest in our main lines to raise them to normal standards. This will take about DKr2bn a year over the next 10 years, but in comparison to Sweden it's quite modest.' But then the nature of Denmark's railway is different. 'We do not need TGV speeds, but we must reach 200 km/h so that we can compete with the private car.'

Herein lies the challenge for Banestyrelsen - to provide infrastructure that allows rail to beat the road competition. 'The fixed link across the Storeb