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FirstGroup-Trenitalia wins West Coast Partnership

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Britain’s Department for Transport (DfT) has selected a joint venture of FirstGroup and Trenitalia UK as operator of the West Coast Partnership (WCP) franchise, which encompasses inter-city services on the West Coast Main Line (WCML) and the initial phase of operations on High Speed 2 (HS2).

The 70:30 First Trenitalia West Coast Rail joint venture will take over operations from Virgin Trains on December 8. In the first phase of the franchise, First Trenitalia will operate existing InterCity West Coast (ICWC) services while acting as shadow operator for HS2, providing design, development and mobilisation services for the new line from London to Birmingham and Crewe.

First Trenitalia will operate ICWC services as a normal franchise, sharing revenue risk with the DfT through a GDP-based revenue protection mechanism and an additional Forecast Revenue Mechanism (FRM) from April 2021.

The former mitigates the financial impact of macroeconomic conditions, while the FRM can be triggered if revenue variances exceed a set threshold from the bid assumptions for any reason. FirstGroup says it believes its TransPennine Express and South Western Railway operations would have remained profitable if these revenue sharing mechanisms had been included in the agreements for these franchises.

Premium

First Trenitalia expects to generate premium payments of £1.6bn in real Net Present Value during the first phase. the joint venture will directly fund £11m of residual value assets, and deductions from the premium will fund First Trenitalia’s £252m investment in the first phase. A further £453m will be funded by rolling stock leasing companies for new and refurbished trains.

First Trenitalia forecasts a combined annual growth rate (CAGR) for seat miles of approximately 1.2% annually during the first phase. Passenger revenues, which were £1.2bn in 2018-2019, are expected to increase at a mid-single digit CAGR over the duration of the first phase, lower than the historic growth rate of the franchise over the last decade.

In the second phase, First Trenitalia will operate the recast ICWC services and HS2 services between March 2026 and March 2031 as an integrated operation under a management contract, with revenue and cost risk transferring to the DfT.

During the second phase, First Trenitalia will be paid a management fee equivalent to a low single digit margin annually, with additional incentive payments for good performance. The contract includes an option for a three-year extension.

The fleet of 56 Alstom class 390 Pendolino tilting EMUs currently used by Virgin will be refurbished at a cost of £117m with 25,000 new seats, additional luggage space, improved passenger Wi-Fi and at-seat power sockets across the fleet with wireless charging and onboard entertainment. Catering will also be upgraded with at-seat service in both first and second class.

First Trenitalia says it will introduce “an easily understandable range of fares and fewer ticket types” with an “easy and rapid” delay-repay system and mobile and smartcard ticketing.

By 2022 the joint venture will introduce 263 additional services per week, with new direct services to Liverpool South Parkway, Walsall and Gobowen and increased services for Rugby, Llandudno Junction, and Motherwell.

Subject to approval from the Office of Rail and Road (ORR), First Trenitalia will operate two services per hour between London Euston and Liverpool Lime Street.

New trains

A new fleet of 10 EMUs and 13 bi-mode multiple units will be introduced by December 2022 to operate the enhanced timetable and replace the fleet of class 221 Voyager DMUs, which are used on services from London to North Wales, operating long distances under the wires. In the meantime, the fleet of 20 five-car Voyager trains will be internally refreshed.

First Trenitalia says the replacement of the Voyager fleet will enable it to reduce rolling stock CO2 emissions by 61%. LED lighting and driver advisory systems will also be installed to improve the environmental performance of the fleet.

Stations will be upgraded with improved waiting rooms, shelters and seating. New first class lounges will be opened at Preston, Stockport and Rugby, while ticket offices at Glasgow Central, Preston and Rugby will be modernised. Passenger Wi-Fi will be upgraded and 10 new secure cycle storage facilities will be built. There will also be 900 additional parking spaces and 100 electric vehicle charging points.

The new franchise will invest £20m in performance enhancements, including developing joint plans with infrastructure manager Network Rail to reduce incidents and installing onboard and trackside infrastructure monitoring equipment.

FirstGroup: no more franchise bids

Following confirmation of its win in the WCP procurement, FirstGroup chief executive Matthew Gregory confirmed that the firm will not be bidding for any upcoming rail franchises in Britain.

“The differences between this contract and more traditional rail franchises were reflected in the terms set out by the DfT, which has resulted in a more appropriate balance of risks and rewards for us as operators,” Gregory says.

“The WCP first phase allows us to earn returns on the significant investments in services and facilities for passengers but protected by a much improved revenue risk sharing mechanism. This will transition to a management contract in the second phase, ensuring we can really focus on using the respective skills and experience within our joint venture to deliver the desired benefits of the HS2 project for passengers and the country.

“The Partnership strengthens and adds a fourth franchise to our UK rail portfolio. Following this award we will not therefore be seeking new franchising opportunities for the foreseeable future over and above our current negotiations with the DfT to extend Great Western Railway (GWR). Our focus remains on delivering sustainable shareholder value and we will actively manage our rail portfolio and its risk and reward profile accordingly.”

FirstGroup says its board has carried out extensive reviews of the WCP proposal and the bid assumptions have been tested and revalidated in accordance with the firm’s May 30 commitment to seek an “appropriate balance of potential risks and rewards for shareholders.”

Source: railjournal.com

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News in English

AKTOR-TEKAL consortium withdraws from major port project in Thessaloniki

Νίκος Καραγιάννης

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ΟΛΘ Λιμάνι Θεσσαλονίκης Γερανογέφυρες

The first withdrawal has been confirmed for the tender process of the largest port project in the Mediterranean, which with 170m euros will complete the 6th Pier of OLTH (i.e. Thessaloniki Port).

According to sources close to the tender, J/V AKTOR-TEKAL withdrew its participation due to “internal issues”. So far (and if we don’t see another withdrawal) the consortia that remain in the competition are:

J/V EIFFAGE-ΤΕΡΝΑ, J/V MYTILINEOS-ROVER MARITIME SL- CH. KONSTANTINIDIS, J/V INTRAKAT-VITTADELLO, ARCHIRODON, J/V AVAX-ΕΤΕRMAR-NV BESIX, ACCIONA CONSTRUCCION

The entries of foreign companies in the project come from Eiffage (France), Vittadello (Italy), Besix (Belgium), Etermar (Portugal) and Acciona (Spain).

A particularly interesting element of the tender, according to a source close to the case, is that up to 6 participants can pass to the second phase. This means that at least one of the above impressive contenders could leave the ‘battle’ prematurely.

The completion of the evaluation of the first stage is expected to take place by next week. Then, OLTH SA is expected to forward to the pre-selected companies the call for submission of binding offers, regarding their participation in the second stage of the tender procedure.

This project is the most important among the mandatory investments undertaken by OLTH SA, according to the Concession Agreement with the Greek State.

A consortium comprised by SALFO-AECOM-SAMARAS & ASSOCIATES is the independent engineer of the project while the project manager is Hill International, with Rogan & Associates in the role of the designer.

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News in English

New obstacles for Athens Metro Line 4 tender as both contenders’ appeals are sustained

Νίκος Καραγιάννης

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Μετρό Γραμμή 4

A major reversal for the development of Athens Metro Line 4 tender, seems to have happened yesterday.

According to sources of ypodomes.com and the first available information, the two appeals previously filed by the two finalists to the Council of State, were both sustained.

It is reminded that the two contenders are J/V AKTOR-ANSALDOBREDA-HITACHI and J/V AVAX-GHELLA-ALSTOM.

The first interpretation given is that the Council of State, having heard the arguments of both participants, essentially decided to reject the evaluations by the tender committee.

As a result, scenarios are beginning to emerge about the fate of the tender itself, that could lead even to the cancellation of the project while others talk about a decision that needs a deeper consideration.

Nevertheless, it is certain that we are at a crossroads for the sole large-scale project of the country, with a budget of 1.8bn euros that promises to revive the construction market.

According to preliminary estimates, what will be done here is to lose some more time. Sources close to the tender point out that we should remain cautious with this subject, before we say anything.

Three scenarios

However, always according to the same sources, depending on what the decision will be, we are in front of three basic scenarios. The first is to return the tender back to the evaluation stage by the competition committee while the second scenario is the cancellation of the tender altogether.

The first two scenarios are linked as either both contenders could survive or one of them, allowing the tender to go on. In the second scenario, both can be rejected resulting to the whole structure of the tender to collapse.

The third scenario is -even if the appeals have been accepted- for the tender to proceed (it is something we have seen in the past). Out of these three scenarios, the weakest one appears to be the third.

In any case, the tender enters into new adventures and a doubtful future. There are voices suggesting that it needs to stay alive and be completed because 2 years will be lost for a project that has been expected for a long time by the market.

On the other hand, there are other voices that point out that with the tender regarding the precursory being stagnant, perhaps a new tender would give a new impetus to the project.

What is currently being recommended is a careful reading of the Council of State’s decision rationale and the consequent compliance of Attiko Metro.

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News in English

Partial undergrounding of Athens Metro Line 1 to be funded by NSRF

Νίκος Καραγιάννης

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Συρμός του ΗΣΑΠ στον Πειραιά

The project for the undergrounding of Athens Metro Line 1 section Faliro-Piraeus, as it seems, will proceed with funds from NSRF 2014-2020.

According to information of ypodomes.com, the project’s integration into the current programming period is almost secured and the project will be able to be implemented.

This means that, once it is included in NSRF, its maturation process will run simultaneously with the preparation of its tender documents, in order for the tender to be approved by the Managing Authority. The cost of the project is roughly 100m euros.

In relevant documents from the General Secretariat of Public Investments and NSRF as well as EPDM it is noted that it is a potentially eligible project by the Operational Program YMEPERAA, provided that a corresponding decision is also taken by the Ministry of Infrastructure and Transport.

NSRF inclusion proceeds – The need for the project’s implementation

According to information available to ypodomes.com, at the Ministry of Infrastructure and Transport, the matter is moving forward and the willingness to integrate the project into NSRF 2014-2020 and more specifically in the O.P. YMEPERAA is considered certain.

It should be reminded that the Municipality of Piraeus has put the undergrounding project very high in its agenda and pushed for its implementation as it believes that the project release enough space for the creation of an avenue that can tackle traffic, especially in the summer, to and from the port.

The project involves the undergrounding of the lines immediately after Faliro Station, the construction of a new underground station named Kaminia (at the intersection of Iroon Polytechniou and O. Skilitsi streets) and the elevation of the lines at Piraeus Station Terminal.

A project with long history

Here, we are talking about one of the most classic ‘mock-up’ projects. The discussion for the undergrounding of this section has been around since 2000 as a project combined with the Tram.

Eventually, due to the reactions the tramway changed its original design and was tendered as an independent project (and is expected to be delivered this summer).

After many years and many setbacks, the project has acquired approved environmental licensing which is considered to be a major advantage that could, in theory, lead to its implementation soon, soon, upon its integration to NSRF, satisfying a decades-long request of Piraeus to stop being ‘bisected’.

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