|Community financing

|Public-private financing

Public-private financing

January 2008 TEN-T Loan Guarantee Instrument Fact-Sheet   Press Release European Commission and European Investment Bank Launch new Instrument to Finance European Transport Network

March 2007 Informal PPP Exchange Report from the 12th Informal PPP Exchange meeting hosted by the Flemish PPP centre in Brussels on 14 March 2007

The total cost of projects for the Trans-European Network is put at € 400 to 500 billion, which gives an idea of the enormity of the undertaking! It is obvious that national government funding - and by extension EU aid - will be nowhere near enough to cover the full cost. The European Union is thus trying to get greater private-sector involvement in the funding of the network, by encouraging public-private partnerships (PPPs). As the name suggests, these are simply partnerships, entailing no privatisation of public responsibilities or nationalisation of private assets.

The advantage of this kind of structure is that it makes for a better spread of the risk, lower borrowing costs, particularly at project launch, and a transparent management structure. Above all, it encourages the private sector to sign up for the public service aspect of projects and the public sector to be better aware of which business services can help to make a project profitable.

The Commission is keen for the private sector and private capital to be brought into projects as soon as possible, at the planning stage. Clearly, the better the risks are understood and spread, the greater the chances will be of bringing the private sector on board: it is thus the job of the public sector to minimise the political and legislative risks and those entailed in scheduling the project, whilst the private sector will bear the risks of planning, financing, construction and traffic.

PPPs are seen as particularly necessary for priority projects which are experiencing difficulties. One of these is the planned high-speed train and combined train link between Munich and Verona via the Brenner Pass (project cost € 22 billion), especially the tunnel part of it which is the most expensive.

Partnerships of this kind have proved invaluable for a number of projects which seemed to have been shelved: for example the Paris-Brussels-Cologne-Amsterdam-London high-speed rail link. Plans to build the section between London and the Channel Tunnel have been revived thanks to a PPP.