Zbornik radova Koridor 10 - Kirilo Savić

3rd International Scientific and Professional Conference
CORRIDOR 10 - a sustainable way of integrations
For the purpose of the highway Public Private Partnership (PPP) projects, World Bank developed
toolkit for financial simulation. This toolkit includes two financial models: graphical and numerical. The
graphical model is simplified model that allows users to visualize real time impact of changes in key
project assumptions. The numerical model is far more detailed and it could be used by the public
authority for an initial project analysis of possible PPP options at pre-feasibility level, to assess
possible toll rates and subsidy levels [8].
Although developed for the road sector, a review of the above financial models indicated that they can
also be adapted for other sectors, including railways. In this study several modifications were made to
the graphical financial model in order to accommodate rail projects. The changes included primarily
parameters that are used to calculate revenues. The graphical model was chosen because it is
simpler to use and considers fewer parameters than the numerical model.
Graphical model discerns five types of project assumptions: source of funds, construction costs,
operation costs, traffic and tariff, and economic context (as shown in Figure 5). The sources of funds
include: government’s construction subsidy, investor’s equity and credit. The user inputs the
percentage of subsidy and equity in the total construction cost, and debt percentage is calculated
accordingly. The model provides two debt repayment options, one with constant annuity value and
other with constant principal value.
Figure 5. Example of main assumptions for financial analysis of rail projects
using the adapted graphical model
While unit costs of railway and road construction show a wide variation, the former are usually higher
than the latter. For example, railway construction costs between 5 million €/km and 20 million €/km,
and 4-lane road construction costs between 6 million €/km and 8 million €/km, have been reported [9].
Railway operation costs are characterized by high fixed costs and relatively low variable costs [3].
Maintenance costs for a high speed rail line in many European countries range from 30,000 €/km per
year (17) to 44,300 €/km and 56,500 €/km which was reported for France and Netherlands,
respectively [10].
The graphical model for highways calculates revenue according to the average number of vehicles per
day and toll rate, which were replaced with the following demand indicators for railways: rail traffic
units per year and price per traffic unit, both of which are used for rail revenue calculations. It should
be noted that traffic growth rate for railways can vary a lot depending on country. For the entire EU,
rail traffic growth rate was about 1.1% in 2010.
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