INTERNATIONAL: The Organisation for Economic Co-operation & Development has introduced sector-specific rules to govern government-backed export credits, loan guarantees and risk insurance in the rail market.
The rail sector understanding which came into effect on January 1 provides tailored amendments to the credit rules followed by the 34 OECD member states, which include the EU countries, USA, Canada, Japan, South Korea and Australia. These rules are intended to ensure that purchasers make procurement decisions based on the quality of the technology and services offered, rather than on the level of state support available from suppliers' home governments.
The rail sector understanding is designed to take into account the relatively long payback times when compared to other markets, and the increasing use of PPP financing. The scope covers infrastructure including control systems, electrification, track, construction and engineering works, as well as rolling stock. OECD estimates that the market accessible to international suppliers is worth more than US$120bn/year in 2015-17.
The understanding lengthens repayment terms for contracts valued at more than US$15·3m to 12 years in high-income OECD countries and up to 14 years elsewhere, with a requirement that the term must not exceed the lifetime of the assets.
'Offering wider terms for the use of export credits in the rail sector will contribute to the creation of new railway projects, as well as the rehabilitation of existing rail infrastructure, which will reduce road traffic congestion and related carbon emissions and help countries achieve their sustainable growth objectives', said David Drysdale, head of OECD's export credit division.