Case Studies: FERTAGUS Train

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Project Overview
Figure 1: The FERTAGUS Train
The FERTAGUS Train Project Profile
Project Type: Both
Contract duration:

1st Contract – 6 years (30 years initially) (1999 – 2005) 2nd Contract (renegotiation) – 5 years (2005 – 2010)

3rd Contract (renegotiation) - 8 years (2011 – 2019)
Budget: EUR 161,7 M (Total Investment)
Project Time Line
Contract signature: 1999;
Signature of the first contract: 23 June 2003;
Signature of the agreement regarding the first renegotiation of the contract: 29h December 2010 – Modifying Agreement to the Concession Contract;
Contract Re-negotiations: 1st re-negotiation (19/9/2003 – 23/2/2005);
2nd re-negotiation (2010), foreseen in previous contract)


This railway service is known as FERTAGUS Train - Railway Axis North / South (Lisbon) linking the North and South railways axis of the Lisbon Metropolitan Area. The contract also extends to the exploitation of complementary bus services largely feeding the railways services.

The FERTAGUS Train has the following railway stations (interurban and regional): Setúbal; Palmela; Venda do Alcaide; Pinhal Novo; Penalva; Coina; Fogueteiro; Foros de Amora; Corroios; Pragal; Campolide; Sete Rios; Entrecampos; Roma-Areeiro. The network has a total of 14 stops and a total length of 54 km (see figure 2).

The project also comprises three transport interfaces with buses and tramway (MST –Metro Sul do Tejo), several viaducts, renovation of the existing lines, construction of elevated crossings and development of new public spaces. FERTAGUS is characterized as a suburban train service which makes the link between Lisbon and the municipalities on the south side of the Tagus River.

The project is intended to make available to local residents a new public transportation service, but also adds value at country level as it provides a new link between the North and the South of the country (Braga – Porto – Coimbra – Lisboa – Faro). Fares are set out in the concession contract with a margin of variation for inflation.

The Contracting Authority (Public Party)

The FERTAGUS Train – Railway Axis North/South (Lisbon) has been sponsored by the Ministry of Finance (Public Contracts division) and Ministry of Public Works (through IMTT, Land Transport Regulator) along with the local / regional municipalities . Procurement was conducted following EU procurement directives, which have been included in the new Public Contracts Code (which also applies to PPP projects). This Code also introduces electronic tendering.

The Concessionaire (Private Party)

The concession for the FERTAGUS Train – Railway Axis North/South (Lisbon) was awarded to FERTAGUS – Travessia do Tejo Transportes, S.A. This company is led by the Portuguese enterprise Grupo Barraqueiro. Grupo Barraqueiro is a Portuguese enterprise providing transportation services for passengers, with extensive experience at the national level.

Grupo Barraqueiro has a partnership with ARRIVA, a British multinational company in the transportation sector, with bus, coach, train, tram and waterbus operations in 12 countries across Europe.


Figure 2: The FERTAGUS train network


The FERTAGUS Train addresses transport and mobility for the local/regional municipalities on the south side of the Tagus River. National passengers are also considered as potential users of this new connection, as the rail link between the north and south of Portugal (Braga – Oporto – Coimbra – Lisbon – Faro) has been established.

Key Purpose for PPP Model Selection

The concession model approved for this project included all of the foreseen investments in a single contract. Therefore contracting was simplified.

Project Timing

The FERTAGUS Train – Railway Axis North/South (Lisbon) is considered to be one of the key projects for the region. The contract was first signed in 1999, but has since been re-negotiated.

Project Locality and Market Geography

The development of this project has changed the internal mobility of the region and the travel behavior of inhabitants going to the city of Lisbon. Previously they were dependent on a single public transport system, the TST (Transportes Sul do Tejo) bus service or had to use a private car.

With the completion of this project, accessibility to the main connection points on the Metro de Lisboa (Lisbon underground), Comboios de Portugal (suburban, regional and national train services) and Metro Sul do Tejo (tram) have been substantially improved.

Procurement & Contractual Structure


An international open call with a pre-evaluation stage was issued. Three consortia (FERTAGUS, TEJO EXPRESSO and STAGECOACH) expressed interest at the pre-evaluation stage. A preliminary assessment of the technical and financial capacity, experience and trustworthiness of the bidders resulted in a final evaluation report where two bidders were selected: FERTAGUS and STAGECOACH.

The final phase of the tender included parallel negotiations with these two bidders. The results were included in the Commission’s final report.

Contract Structure

The concession concerned the supply of equipment and rolling stock, operation and maintenance. The public authority co-financed most of the project prior to commercial operations. In addition the public authority, in its capacity of regulator, determines transport policy and the level of service (conditions of organization and functioning of the public service, pricing policy etc.)

The Concessionaire is entitled to all revenues generated by the operation of the service (passenger fares) as well as revenues from advertising and exploitation of the commercial areas and car parks included in FERTAGUS Train stations. The public party guarantees a minimum revenue to the private party through a subsidy when demand is below the minimum limit (this applied only until 2011).

The total financial burden supported by the State is divided in two items: compensation for financial balance (EUR 45.2M 1999-2004), and provision of public service (EUR 57.6M 2005-10). From 2011 onwards FERTAGUS represents no financial burden to the State in respect of fare box revenue compensation.

Other clauses have been included in the contract since the first contract re-negotiation in 2005. These have eliminated the risk associated with optimism bias in demand forecasting, and established a demand premium divided between the State and the Operator (75:25). Profits are expected in 2017-2019, and will be shared 50:50 between the State and the Operator.

Risk Allocation

Risk is allocated as depicted in figure 3.


Figure 3: Risk allocation


There were no specific clauses in the contract relating to performance. However, performance can be reviewed in respect of the number of passengers, operational performance and activity indicators, and client satisfaction. Since 2004 shared ticketing revenue has exceeded target thresholds, and actual traffic has been above the forecasts made at the time of the second contract renegotiation. Table 1 presents forecasted passenger- kilimeters versus actual in millions. Over the peiord 2004 – 2010 (see Table 1) the grantor received EUR 11.81M. This is based on the arrangement for the sharing of ticketing income between 2005 and 2010, shown in table 2. Since 2011, all excess income from ticketing above the values specified in the concession contract has been shared 75% for the grantor and 25% for the concessionaire.

There are penalties in the contract related to the KPIs, and fiscal and non-fiscal penalties are reported in the Annual Report and Accounts. However the reasons for these penalties are not clear. In 2010, an amount of EUR 16,690 was related to penalties, whilst in 2011 the amount had fallen to EUR 1,439.

According to the Modifying Agreement to the Concession Contract, a penalty should be applied if there are violations of the obligations described in contract; to provide information to the grantor; for maintenance of the assets; passenger safety obligations.

Table 1: Forecasted vs cctual passenger-kilometers
ListYear M passenger-km Grantor Revenue


Actual Expected (1st contract) Expected (2nd contract)
1999 51.3 159.6
2000 162.4 369.0
2001 205.2 374.0
2002 242.9 380.0
2003 246.4 386.0 246.4
2004 392.0 269.7 0,04
2005 340.4 397.0 316.8 1,62
2006 361.5 403.0 327.4 1,82
2007 377.5 409.0 334.2 2,41
2008 398.6 415.0 338.3 2,99
2009 385.8 420.0 343.7 1,92
2010 392.6 424.0 350.5 1,01

Sources: FERTAGUS, S.A. , Tribunal de Contas – 2012

Table 2: Ticket revenue sharing between 2005 and 2010
Revenue surplus related to the annual limit Grantor Concessionaire
< 5% 25 % 75 %
>5% 75 % 25 %

The FERTAGUS Train is now performing well. According to the latest audit by the Court of Auditors, it is a successful public-private partnership, which since January 2011 has no longer been receiving compensation from the State.

However, it was not always like this, as up to 2010 the State had paid to the FERTAGUS concessionaire approximately EUR 102.8M as compensation for financial imbalances or compensation for the public service.


  • R. Macario R. Joana, R. Couchinho, 2013, FERTAGUS Train In Roumboutsos, A., Farrell, S., Liyanage, C. L. and Macário, R, COST Action TU1001 Public Private Partnerships in Transport: Trends & Theory P3T3, 2013 Discussion Papers Part II Case Studies, ΙSBN 978-88-97781-61-5, COST Office, Brussels available at
  • FERTAGUS (2010), “Relatório de Sustentabilidade 2009 – 2010” (Sustainability Report – 2009/2010)
  • FERTAGUS (2011), “Relatório e Contas 2011” (Annual Report and Accounts 2011)