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March 2011 | Frontier Economics, Atkins, ITS 1 Appendix 3 – Algarve railway in Portugal 3.1 Introduction 3.1.1 Project overview Location The Lisbon – Algarve railway project covers a significant part of the overall modernisation of the Algarve railway line (covering the Linha do Sul and Linha do Algarve). The part included in the current study covers the segment from Coina (near Lisbon) to Faro, including a branch to Porto de Sines. The project is part of the TEN-T Priority Project 8 (Multimodal Axis Portugal/Spain – Rest of Europe). Figure 1. Algarve line from Lisbon to Faro Lisbon Pinhal Novo Coina PK 94 Ermidas Sines Funcheira Tunes Faro Source: Openstreetmap.org Description During the period 2000 to 2006, the Cohesion Fund contributed to the funding the following subprojects of the Algarve railway line: Subproject 2000PT16CPT003: This subproject covered two sections: Appendix 3 – Algarve railway in Portugal 2 Frontier Economics, Atkins, ITS | March 2011 Pinhal Novo – Poceirão – Pinheiro – Ermidas (excluding section from Pinheiro to Km 94). Work on this section included the complete renewal of 35 kilometres of track, the construction of sidings for another 30.5 kilometres and the installation of the automatic control system. Linha de Sines (Ermidas to Porto de Sines). This involved mostly minor works as well as the partial renewal of 5 kilometres of track Subproject 2000PT16CPT012: Coina – Pinhal Novo. This subproject involved the construction of a 800-metre tunnel, a 475-metre viaduct, and three new stations and 15 kilometres of track duplication. Subproject 2001PT16CPT001: Pinheiro to Km 94. This subproject involved the modernisation of 35 kilometres of track and the installation of the automatic control system. Subproject 2001PT16CPT003: This subproject covered two sections: Ermidas – Faro. This involved the redoubling of 20 kilometres of track and the renewal of over 138 kilometres of track (complete renewal for 41 kilometres and partial renewal for 97 kilometres). It also involved the renewal of twelve stations, and the construction of a viaduct, a bridge and a station. Funcheira – Ourique. This involved the complete electrification of the railway section and the installation of an automatic control system. The modernisation work started in 1997 and, according to the ex post capital expenditure data provided by REFER, it was mostly completed by 2006. However, based on the ex post passenger data, we believe that the line has been open to traffic since 2003, even without reaching maximum capacity. This maximum capacity on the line should coincide with the end of 2006 and beginning of 2007, when capital expenditures in the line stopped. Final reports show some delays in the completion of the projects. These time delays range between one and two years. Further evidence of delays happening in the project is the time indicated by the ex ante CBA regarding when the capital investments were supposed to take place and the actual time when these capital investments happened. The total aggregate value for the project was €419,026,183, while the total amount eligible for funding was €405,043,302 or 96 per cent of the total. The total Cohesion Fund contribution in the period 2000-2006 was €323,486,946, equal to about 80% of the eligible project costs. Appendix 3 – Algarve railway in Portugal March 2011 | Frontier Economics, Atkins, ITS 3 3.1.2 Context Socio-economic context The line connects by rail Lisbon and the Algarve region in Portugal, and allows for future improvements in the railway connections between Portugal and the south of Spain, in Andalucía. It is worth noting that before the modernisation of the line started, there was no direct rail connection between Lisbon and the Algarve region, the renovation of the existing track was required and the line had important speed limitations due to the track and the obsolete signalling equipment. The part included in the current study covers the segment from Coina (near Lisbon) to Faro, including a branch to Porto de Sines. The project involved, among other works, the duplication of the track in some sections of the line, the electrification of parts of the line which were previously non-electrified, the construction of various new stations, and the installation of a new automatic control system to increase maximum speed in various sections of the line. Strategic policy context At the time when the ex ante cost benefit analysis was carried out, and the applications for funding submitted, the stated objectives of the project were: to increase the maximum speed on the line to 220km/h; to reduce the journey time between Lisbon and Faro to 2h 45min; to allow for better railway connections between the south and the north of Portugal; to reduce the operating costs of the line; to improve safety conditions and the quality of service on the line; and to reduce transportation costs and increase productivity levels in the area covered by the railway line. As mentioned above, the project is part of the TEN-T Priority Project 8 (Multimodal Axis Portugal/Spain – Rest of Europe). This axis is expected to reinforce multimodal corridors linking Portugal and Spain, to contribute to the improvement of links between the centre of the EU and its peripheral regions, and to strengthen the Iberian Peninsula‟s position as a western European gateway. In relation to the objectives of the TEN-T Priority Project 8, the project contributes to the development in Portugal of a service platform that articulates the long-run transport between Europe on one side and America and Africa on Appendix 3 – Algarve railway in Portugal 4 Frontier Economics, Atkins, ITS | March 2011 the other side. This is one of the objectives stated by the Portuguese government in its transport policy strategy for the period 2000-2006. 3.1.3 Sources To carry out the analysis we have relied on a variety of different sources of information provided by DG REGIO and by stakeholders in Portugal. This allowed us to review the ex ante analysis undertaken to apply for EU funds. We have obtained Funding Applications and Funding Decisions for each of the four subprojects listed above from DG REGIO. Each application provided a detailed description of each subproject, its objectives and the costs and benefits that it was expected to generate. DG REGIO also provided additional supporting documentation, such as the initial overall cost-benefit analysis and final reports for each of the four subprojects to check the section have been completed. In addition, REFER also made available the spreadsheet containing the calculation underpinning the initial comprehensive cost-benefit analysis of the project The complete list of documents obtained, mainly related with the review of the ex ante analysis, is provided in Table 1. Appendix 3 – Algarve railway in Portugal March 2011 | Frontier Economics, Atkins, ITS 5 Table 1. Summary of project-related documentation Documents Obtained from Funding Applications DG REGIO All subprojects Funding Decisions DG REGIO All subprojects Ex ante CBA Intraplant Consult study (1996) DG REGIO and Ferbritas study (1997) REFER Pinhal Novo to Faro by REFER, covering 3 subprojects Ex ante CBA – Spreadsheet calculation REFER Pinhal Novo to Faro, covering 3 subprojects EIB Initial and Final reaction DG REGIO Subproject 2000PT16CPT003 Evaluation study (POVT) DG REGIO Subproject 2001PT16CPT001 Ex post evaluation, Projecto Lisboa – Algarve REFER Slide pack presentation of the completed project Environmental Impact reports DG REGIO All subprojects Final Payment declarations DG REGIO All subprojects Ex ante CBA – Variante da Trofa (2010) REFER Current ex ante CBA of a different rail link To carry out an ex post analysis of the project, REFER and CP (the train operating company) made available significant amounts of data, including outturn costs (capex and opex) and passenger numbers and updated values for other parameters (such as Value of Time). We provide a list of the data provided in Table 2. Appendix 3 – Algarve railway in Portugal 6 Frontier Economics, Atkins, ITS | March 2011 Table 2. Summary of Primary & Secondary Data Availability Data Source Issues Passenger and Freight numbers REFER Infrastructure investment costs REFER Infrastructure operating costs REFER REFER and CP provided average Train operating costs REFER and CP operating costs for electric rolling stock CP provided average fares per Revenues REFER and CP passenger Based on two studies: For passengers: “Calculating Transport Congestion and Scarcity Costs – Final Report of the Expert Advisors to the High Level Group on Infrastructure charging (Working Value of time REFER Group 2) – May 1999”; and For freight: “Developing Harmonised European Approaches for Transporting Costing and Project Assessment – Annex A – An International Meta-Analysis of Values of Time – March 2000” Vehicle operating costs REFER Based on 2000 and 2004 INFRAS/IWW studies Marginal costs of road travel and REFER Based on 2000 and 2004 congestion INFRAS/IWW studies Number of trains and train REFER capacity We had a meeting with REFER, CP, and POVT (Programa Operacional Temático Valorização do Território, the government programme for the implementation of infrastructure projects) with two key objectives: To clarify our understanding of the calculations and assumptions underpinning the ex ante CBA; and, To discuss the usefulness of the CBA in the decision-making process as experienced in the pilot project experience and in Portugal. Throughout this pilot project study we have also received regular support and advice (via email and telephone) from POVT, REFER and CP in Portugal and from representatives of the DG REGIO Portuguese Geographic Unit. 3.1.4 Overview of any overall issue and challenges with the evaluation. REFER carried out two separate ex ante CBAs. The first covers three sections of the project, between Pinhal Novo and Faro. The second CBA, for the section Appendix 3 – Algarve railway in Portugal March 2011 | Frontier Economics, Atkins, ITS 7 Coina-Pinhal Novo, covers a longer suburban route between Chelas and Pinhal Novo.

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