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36 F I NA NC I NG S U R FA C E TR A NSPOR TA TION IN T HE U NIT ED ST A T ES tolls and those using availability and performance-based A public-sector comparator analysis has shown that this payment mechanisms. Availability and performance- approach provides significant efficiencies derived mainly based projects are increasingly popular. However, they from combining large on-line capital widening works may be more of a financier-led solution than a policy with 30 years of operations and maintenance. solution, since they provide no new money and instead The scope of the P3 procurement involves operat- only reprofile government obligations. This raises the ing and maintaining a 400-kilometer highway, includ- question of whether the availability and performance- ing the Dartford Crossing over the Thames and three based P3 approach is sustainable. In the United King- tunnels, and widening 100 kilometers of highway. Bids dom, 20 percent of the Highways Agency budget pays were received from five consortia in March 2006, with for shadow toll projects, which represent 8 percent of three groups shortlisted in October 2006 and final bids the highway network. In Portugal, 125 percent of the received in February 2008. The preferred bidder was budget is paying for 50 percent of the network. Mr. Bain selected in May 2008, when a separate competition to believes that the M25 will be the last shadow toll project raise more than 1 billion in funding began. The High- in the United Kingdom because the concept is unsustain- ways Agency worked closely with 19 banks, and the proj- able. This experience demonstrates that financing solu- ect reached financial close in May 2009 without the need tions should not be confused with funding solutions. for public subsidies. Credit was extended by a group of 16 private banks and EIB. The Highways Agency found that even in a time of financial turmoil, the P3 approach High-Speed Rail and M25 Highways Agency provided value for money. Mr. Scholey stated that the DesignBuildFinanceOperate lessons learned from the M25 P3 initiative indicate that the scope should be fixed early in the process and stake- Ian Scholey of Parsons Brinckerhoff in the United King- holders should be involved in the project. dom discussed his experience in working on highway and rail P3 projects in Europe. They include the Portu- guese High-Speed Rail Project, which is part of a Trans- Evolution of Transportation Finance European Networks corridor that will link Portugal with in China Spain and France. The Portuguese have done a bench- marking assessment of how other rail projects in France, Zongzhi Li of the Illinois Institute of Technology began by Spain, the Netherlands, and Brazil have been financed reviewing the current status of the surface transportation and procured. The model the Portuguese have used is sector in China, which is seeing extensive investment and to let individual P3 contracts for substructure, super- expansion. In 2009, the highway network included 2.4 structure civil and track works, and "high-tech" control million miles of highway and 40,000 miles of expressway, systems with values of between 1.4 billion and 2.0 bil- with more than 6,000 miles of expressway under construc- lion, while retaining the overall management as a pub- tion for a total investment of $150 billion. The rail net- lic rail function. The program is funded from multiple work includes 54,000 miles of track, of which 4,071 miles sources including EU grants (39 percent), state support can sustain high speeds of 155 to 220 mph, with 20,000 (12 percent), and private finance (49 percent, of which miles of new track under construction, involving a total 36 percent is from EIB). The cost of the program is 40 investment of $300 billion. There are also 9,000 miles of percent less than public-sector comparator. The public bus transit systems and 480 miles of fixed guideway tran- sector retains responsibility for traffic, political, and sit lines. Plans call for investing $350 billion in roads and some planning and environmental risk, while the private $700 billion in rail by 2020, when the country will have a sector assumes responsibility for all other risk areas. The high-speed rail network of some 10,000 miles connecting Portuguese have had good experiences with P3s. They most capital cities to Beijing within 4 hours. have managed P3s well and derived significant savings In 2008, the federal government provided 15 percent from the approach compared with the cost of advancing of all highway funding in China. Local governments pro- the projects on a traditional public-sector-led basis. vided 35 percent of highway funding, domestic banks One of the largest P3 projects in the United Kingdom provided 36 percent, and the remaining 14 percent came is the M25, an orbital highway around greater London from other sources including foreign loans, domestic with daily traffic levels exceeding 200,000 vehicles, enterprise investments, and carryover funds from earlier which makes it one of the most heavily traveled highways years. The profile of rail funding is markedly different, in Europe. The Highways Agency has initiated a project with the central government contributing at least half to widen the remaining three-lane sections to four lanes of all funding. Rail funding also includes medium- and and has let a 30-year P3 contract to operate, maintain, long-term domestic bank loans and railway bonds. and widen the motorway. This is the Highways Agency's China is currently facing many highway financing and 12th P3 contract, and at 30 years it is by far the longest. investment issues. Funding is insufficient, with the high-