Tuesday, November 29, 2016

EFE’s suburban projects facing delays and cost overruns

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Despite making bold promises for its commuter network in a series of projects, Chilean State Railways’ (EFE) plans are failing to live up to expectations, as regional editor Ian Thomson-Newman explains.

CHILEAN State Railways’ (EFE) ambitious plans for boosting rail travel for commuters into Santiago were praised for their vision and scope just a few years ago. However, with implementation seriously behind schedule and the cost of the flagship Rancagua Express project soaring to more than twice its original budget, they are now increasingly considered to have been overly ambitious and unrealistic.

The country’s difficult economic environment partly explains the slowdown, and the situation is such that government enthusiasm for other projects, such as the Santiago Alameda - Malloco line and the link to Batuco may be jeopardised by the cost overruns. It could potentially lead to the use of a Build Operate Transfer model, as was originally proposed for the Melipilla Project way back in the 1990s, as opposed to leaving financing and operations all up to EFE.

The funds available for such projects might also be limited by the government´s commitment to social programmes, such as the provision of free education, and by the fallout from lower copper prices, which continues to be a lynchpin of the Chilean economy, and is currently at $US 5425 per tonne; when EFE’s 2011-2013 plan was approved, it was at almost $US 8818 and was at over $US 6614 at the time of the 2014-2016 revision.

shutterstock ChileEFE’s situation is of obvious concern to the government and since early August, both EFE’s president and general manager have been removed from their posts. The new president is Mr Germán Corréa, a respected politician whose public-sector career in transport spans several decades, including a 2.5-year stint as transport minister.

Since the early 1990s, EFE has entered into three-year development plans with the government, which effectively oblige the former to implement projects and the latter to provide financial support. This can come from a variety of sources, including guaranteed loans and subsidies for transport projects in the provinces equal in value to those budgeted for TranSantiago, the capital´s deficit-ridden public transport system. However, important components of the 2014-2016 Plan, and even the 2011-2013 one, are yet to be delivered.

This includes the Rancagua Express project, which is a new intensive service between Santiago Alameda and Nos, 21km to the south, and a less frequent one as far as Rancagua, 82km away.

The project was budgeted in the 2011-13 Plan at $US 286m and was set to be inaugurated in 2014 but delays meant that it was carried over into the current plan’s period. It is now expected to cost $US 635m and not to come on stream until March 2017 and, even then, trains will still take 1h 20min to reach Rancagua, instead of the projected 55 minutes, since certain bridges, needed to avoid level crossings, will not be ready in time. Delivery of Alstom Xtrápolis trains for the new service began in late 2013, although they are yet to be needed.

Causes

The delays and cost overruns have had various causes, both infrastructural, such as the original project involving the laying of just one extra track as far as Nos, instead of the two required, and administrative, such as environmental objections being lodged and upheld by the courts.

In outlying municipalities, there is firm support for the project, particularly for the greater accessibility it will provide. But closer to the city centre, a suburban rail service with widely spaced stations, adds relatively little to existing accessibility indices; hence opposition grows, because of what it entails in terms of acoustic contamination and greater physical separation of communities on one side of the line from those on the other.

The Rancagua Express is not the only Santiago commuter project that is running behind schedule. The inauguration of the 25km line between Alameda and the south-western suburb of Malloco, included in the 2014-2016 Plan, was fixed for 2017, but construction has yet to start. This is the first stage of the line to Melipilla, a town some 61km from Alameda on the current freight line to the port of San Antonio.

According to EFE´s 2014-16 Triennial Plan, the target was to carry 53 million passengers in 2016 and 69 million in 2017. As it is turning out, the 2016 figure will probably not exceed 25 million, although it would be around 29 million were the existing suburban service south from Santiago not have been severely cut-back while Rancagua Express works continue. Over 80% of the 25 million travel between Valparaíso and Limache where EFE’s generally-successful Valparaíso Regional Metro (Merval) subsidiary has maintained strong ridership.

For 2017, given that the Rancagua Express is expected to enter service in March, total ridership is projected at around 46 million. EFE had forecast carrying almost 100 million passengers annually by 2020 but that now seems out of reach since, even if the Malloco service is in operation, the suburban line to Batuco, a suburb to the north-west, almost certainly will not be.

Freight is also missing targets with EFE suspending its freight operations. Instead private concessionaires, Ferrocarril del Pacífico and Transporte Ferroviario Andrés Pirazzoli, operate services on its tracks on the Santiago - La Calera - Valparaíso axis, and further south. Hence, EFE can facilitate freight traffic through infrastructure improvements, but has no direct control over what is operated even though it sets tonnage targets.

Since 2003, total freight tonnage has fluctuated around the 10 million tonne mark but EFE aimed for it to climb to 16.7 million by 2015 and 22.2 million by 2020. The 2015 output was only 10.4 million, and has suffered slight declines in recent years. There is potential for freight traffic to grow, for instance to and from comprehensive port developments in San Antonio, although freight trains have only very limited access to the port of Valparaíso, due in large part to line occupancy by Merval’s frequent suburban trains.

The only stretch of the EFE network over which it is able to run freight trains is the Chilean section of the Arica to La Paz Railway (FCALP). While no commercial trains have run over the FCALP since 2005, an infrastructure rehabilitation programme, started in 2010, has returned the line to an operable status, although commercial operation is yet to restart.

It is hoped that the recent high level personnel changes will get EFE onto the right path, with the company’s new president and general manager expected to turn the company around. There have been no proposals to modify the company’s structure as such, but with BOT an option for forthcoming projects, the government is actively looking for ways to avoid cost overruns and miss delivery dates in the future.

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