Finance - Articles and news items
Issue 2 2011 • 6 May 2011 • Mario Aymerich, Head of Division for Urban Transport and Other Urban Infrastructures, European Investment Bank (EIB)
According to the Treaty of the European Union, the EU has formal responsibility for Regional Policy but, in accordance with the subsidiarity principle, not for Urban Policy. Legislation on urban development therefore remains the responsibility of local administrations (towns, cities and regions).
The urban dimension is nevertheless incorpor – ated at EU level through the application of the Cohesion Policy including; the definition of a territorial agenda and the approval at Ministerial Level of guiding principles to promote sustainable urban development through an integrated approach and the creation of financial engineering tools. The European Investment Bank (EIB) supports and fosters this principle following the notion of the Leipzig Charter (2007), in order to make European cities better places to live and work in, by providing innovative and flexible financial instruments to both public and private actors investing in the urban sector.
Across Europe and around the world, media headlines report a now familiar story. ‘Tube repairs at risk as cost overrun hits £750m’1. ‘Amsterdam Metro Line Sinks Deeper into Trouble’2. ‘Trenton: Rail Construction Faces Cost Overruns’3. And in the most recent setback for the Edinburgh tram project, ‘Tram line design months late as budget slips £10m off track’4. While these media headlines may cover one-off projects, each with their own unique local circumstances that led to escalating costs, there is a growing body of evidence that overruns are a persistent feature of large urban and intercity rail projects. Understanding the patterns and causes of cost overruns is central to developing effective remedies.
Keeping up with Nottingham’s public transport requirements has needed a few gear changes.
Nottingham City Transport (NCT) is the primary public transport operator in the historic East Midlands City. Winner of UK Bus Operator of the Year at the Bus Industry Awards in 2004, NCT employs 1,130 people in Nottingham, and sees almost half the population of the city use its services. It generates annual dividends for both the city council, the majority shareholder, that has seen a total return of £6.9 million in the past 20 years, and for Transdev, the multi-national transportation company, which owns an effective 18% stake in NCT. In 2007, the company generated an EBITDA of more than £6 million, enabling reinvestment in both vehicles and staff.
Since 2000, the European Investment Bank has lent over EUR 17 billion for investment in urban transport projects, mostly for schemes located within the European Union Member States. Established nearly 50 years ago, EIB is the EU’s bank for financing projects that promote the Union’s economic and social policies.
Currently, EIB’s main lending priorities are focused on projects supporting development in the EU’s poorer cohesion regions, construction of trans-European transport and energy networks, promoting innovation and human capital, supporting the activities of small and medium sized enterprises, improving the environment, and ensuring efficient and secure energy supplies. Outside the European Union, the Bank supports projects as part of the EU’s external cooperation and development policy.