Portugal’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."