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Portugal's high speed rail network 'not financially viable' according to final report

tgvPortugal’s Court of Auditors' report on a high speed rail service, including a link between Lisbon and Madrid, was released today.

The Portuguese high speed rail project was cancelled in 2012 and today's report concludes that the €11.6 billion cost estimate would have made the railway ‘not financially viable.’

The Court of Auditors report also notes that the 12 year study itself has cost €153 million of taxpayers' money.

In addition to the studies undertaken, the TGV project has cost the taxpayer over €32.9 million in 'structural costs' and three claims for compensation lodged after the project was cancelled, have cost an initial €29.4 million, with more to come.

Two of these compensation claims were made by competitors on the Lisbon-Poceirão route and the other,  after the PPP money was not forthcoming,  was made by the consortium which had already been awarded the contract to build a rail line between Poceirão and Caia.

"Preliminary studies have shown that an investment in a high-speed rail network had no financial viability. The same studies have shown that the Lisbon-Madrid axis, the first anticipated link to be implemented, would also be cost-prohibitive," reads the audit released today on a project that began in 1988.

The investment would be "unparalleled in international terms," and it was based on six Public-Private Partnership (PPP) funding contracts whose burden on the public sector would amount to €11.6 billion with the costs being channelled to CP and REFER, "two public enterprises that already are loss-making."

The audit concludes that "there is no evidence that the benefits outweigh the costs of a high-speed rail network."

The project was initiated "without it being possible to assess the cost-benefit to Portugal, and the State did not prove before the Court the affordability of charges stemming from the single PPP contract that was signed and which was refused." This was for the Poceirão-Caia section.

Besides the lack of financial viability, the Court detected "some excess optimism" in an attempt to push through an untested model "without the use of what is commonly referred to as a pilot project."

"Given the complexity and the lack of previous experience in the implementation of an entirely new transport system, ... there was some over-optimism” reads the report. The rail project was driven by the José Sócrates' government and was cancelled by the current Passos Coelho coalition.

The high-speed rail project included the development of a new rail network to transport passengers and goods at maximum speeds of 250 to 350 kmph.

A company established in 2000, RAVE, was in charge of the development of the necessary studies and the launch of the procurement procedures.

RAVE, led by Guilherme d'Oliveira Martins, optimistically stated that "the report's conclusions and observations have the primary purpose of identifying relevant aspects for future public investment management."

Comments  

+1 #7 caver38@yahoo.com 2015-03-25 17:57
This will leave Portugal a backwater , and disconnected from mainstream Europe . The government should be asked why they put so much money into motorways and not rail .
If the government and the so called auditors had looked at other countries and the development which has come from high speed rail , they would see that they have been and are stupid , incompetent and should be held to account , even in the future .
The biggest problem in Portugal is excessively paid politicians and civil servants who are inefficient and unaccountable , and there are too many politicians per capita in Portugal . Also legislation is out of step with the rest of Europe , and much EU legislation not respected , example car import duty .
It can be seen that elections can never be considered accountability , and politicians have to be made legally accountable for life for their decisions and actions whilst in office .
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-5 #6 Pedro G 2015-01-11 22:25
Quoting leol:
dear mr. John & Mr Desmond. If this is your meaning about the Portuguese and the behavoir, can you explane why you are here and write this comment about a rubbish country. I have just one advice, please go back to your own country were everything is so good and fantasic. Please leave the rest of us here, because we love this country and the Portuguese people and his behavoir.


It is not certain that John or Desmond live in Portugal...
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-7 #5 leol 2015-01-11 22:19
dear mr. John & Mr Desmond. If this is your meaning about the Portuguese and the behavoir, can you explane why you are here and write this comment about a rubbish country. I have just one advice, please go back to your own country were everything is so good and fantasic. Please leave the rest of us here, because we love this country and the Portuguese people and his behavoir.
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-1 #4 RobertB 2015-01-11 13:07
Without fast connections, Portugal is better off getting out. Special taxes on Algarve non-residentes with real-estate there, woutd be possible again and PT can stay in the periphery where it belongs, not beeing a concurrent to the economic centre of Europe. immigrants from all over the world were welcomed with negative discrimination, until found to be nuisances and if Portugal is a nuisance too, it should get back to be proud and alone. Sócrates has another view on Europe, where the silly nationalists still rule to defend their petty little interests, rather similar to corruption. It's Nelson all over again, but by then there was no fast internet yet. Go on dwelling in the rule the bookkeeper. Money is for spending and not to be sent travelling around the globe, in order to make it seem scarce
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-1 #3 Mr John 2015-01-06 21:06
Desmond,,,
This is what defies belief .... who can explain ?
Need you say any more, what an absolute rubbish country.
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-2 #2 Desmond 2015-01-06 14:50
This is what defies belief .... who can explain ?

In Europe's very own banana republic with people dying in the emergency departments of Portuguese hospitals whilst waiting 5 or more hours for treatment. Due to shortage of staff many of whom can earn (and so have left) 2 or 3 times more elsewhere in the EU.

Surely there are interim reports that would have identified escalating costs and capped them ?

12 year study itself has cost €120 million of taxpayers' money. (also) the TGV project has cost the taxpayer over €32.9 million in 'structural costs' and three claims for compensation cost an initial €29.4 million, with more to come.

Getting on for 200 millions that could have been spent stripping asbestos out of buildings. Paying more to health workers. Closing municipals and Freguesia's etc etc

How much of the new EU money soon arriving will be siphoned off to cover these debts, Estradas debts, other transport debts .... not clawed back from the off-shores.
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0 #1 liveaboard 2015-01-06 10:37
11 billion is an awesome sum of money; however, I suspect that's the cost with all of the usual massively overpaid corporations getting most of it in guaranteed profits.
At the moment, with fuel prices low again, high speed rail seems a silly idea. But a decade from now as oil prices go high, and air travel with it, I believe this tourism dependent country will regret not having built an alternative transport link.
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