Zbornik radova Koridor 10 - Kirilo Savić

3rd International Scientific and Professional Conference
CORRIDOR 10 - a sustainable way of integrations
The adapted model outputs (similarly to the original model) are cash flow graph, debt repayment
graph and dividend graph. The user can test the sensitivity of the model by changing 14 key project
assumptions that are shown in Figure 7. For each set of assumptions, the model displays key project
financial indicators.
Figure 6. Example of key project assumptions that can be used for sensitivity testing
The adapted financial model was tested for a rail project with length of 100 km, total construction cost
of $600 million ($6 million per km), annual operation cost of $6 million, initial traffic of 300 million rtu
per year, and traffic growth of 2% per year. The initial traffic was estimated according to the typical
productivity of EU rail traffic. Other assumptions are as shown in Figure 6. The values adopted for
inflation rate, corporate tax rate, and value added tax (VAT) rate represent the economic context in
Serbia.
Since rail system is, in general, loss making and dependent from government operating subsidy, the
goal in the model testing was to find minimum tariff, so that the project is still considered feasible. It
was performed analysis by changing initial traffic and tariff in order to keep IRR the same. Results of
the analyses are shown in Figure 7. The impact of the operation costs was found to be relatively small
compared to the construction cost and therefore they were kept constant at $6 million per year.
As shown in Figure 7, the financial feasibility of rail projects is highly dependent on the expected initial
traffic and construction cost. The acceptable tariff depends on the economic context of the country.
Table 1 shows, passenger fare and freight tariff, as well as tariff per rtu for different countries.
Figure 7. Example of minimum required tariffs for a railway project to yield IRR of 8% and 12%
using the adapted financial model
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