Case Studies: The Caen' TVR
 copyright : Alain Caraco (Guided trolleybuses in Caen (Calvados, France) – Bernières tram stop (lines A and B), 12th August 2004 Figure 1. Caen's TVR | |
| Caen TVR, France | |
|---|---|
| Project Type: | Both |
| Contract duration: | 34.5 Years (30 years from the beginning of commercial operation) |
| Budget: | EUR 230 M (Budget represents the TVR construction costs.) |
| Project Time Line (SYSTRA, 2000 and Chambre régionale des Comptes, 2004) | |
| Project conceived: | 1988; |
| Tender: | 1993; |
| Contract Award: | 1994 (construction works) / 1997 (public service); |
| Financial Close: | April 2000; |
| Beginning of construction: | 2000; |
| Beginning of Commercial Operations: | November 2002; |
Contents
Introduction
The project concerns the construction of a guided tyre tramway system and operation of the entire urban public transport network of Caen.
Caen is a medium size city (109,000 inhabitants and 215,000 including the suburbs) in the north-west of France. TVR is a tyre-mounted guided vehicle. The line is 14,8 km long. The project includes the building, operating and maintenance of the TVR and also the operating of the whole urban transport network. Urban transport networks operated by a private company are very common in France. However, there are very few cases in which the investment is also delegated to the private partner. The agreement consists of two (2) concession agreements.
(a) The public works concessionaire is responsible (SYSTRA, 2000) for:
- financing the construction of the TVR;
- preparing the structure and installations ;
- testing and development of the rolling stock as well as its approval (hence, the ownership of the technical, financial and schedule risks);
- heavy maintenance of the TVR.
(b) The public service concessionaire is also allocated the responsibility of operating the bus network and the daily (light/service) maintenance of both the TVR and the bus network (SMTCAC, 1997).
The tyre-mounted tramway was put into service in November 2002.
The Contracting Authority (Public Party)
Since the introduction of the Domestic Transport Orientation Law of December 30th 1982, urban public transport organizing authorities, that can be municipalities or intercommunal authorities, are in charge of the development and the operation of the urban public transport network. In this respect, the Syndicat Mixte des Transports en Commun de l'Agglomération Caennaise (SMTCAC, nowadays ViaCités) is the urban transport organizing authority. It is a syndicate composed 75 % by the intercommunal cooperation structure (communauté d'agglomération Caen la Mer) and 25 % by the departement (a larger local authority). It is a cooperation structure whose only responsibility is urban public transport.
In the 1980's and 1990's there was financial support from the central state to create new a line of tramway and other urban transport system with specific lanes.
The Concessionaire (Private Party)
For this project, two special companies have been created.
First of all, the public works concession is with the Société du TVR (STVR) owned:
- 68% by construction firm SPIE Batignole;
- 32% by tramway equipment firm Bombardier-ANF (SYSTRA, 2000).
In charge of the public service concession is the Compagnie des Transports de l'Agglomération Caennaise (CTAC, nowadays Keolis Caen), owned 100 % by Via-GTI (nowadays Keolis).
Moreover, there is an interface contract between the public works concessionaire, the public service concessionaire and the public organizing authority.
For overseeing the construction of the tram and its project management, the public body has also contracted for assistance with an engineering consultant, a consultant in financial engineering and a lawyer.
Users
Caen is a medium size city (109 000 inhabitants in the city, 215 000 in the whole intercommunal structure) in the north-west of France.
About 28 % of the inhabitants of the agglomeration live less than 400 meters from a tram station. This area also accommodates about 29 % of the jobs of the agglomeration. A lot of university locations and secondary schools are situated near the infrastructure.
Key Purpose for PPP Model Selection
Both technical and financial reasons justified the choice of the PPP model for this project (Chambre régionale des comptes, 2004). These include:
- implementation of an new and innovative (and therefore complex) technology: the TVR;
- technical know-how from the private operators;
- avoidance of pre-financing of the infrastructure by the public body.
Project Timing
The ex-ante evaluation reported an significantly higher IRR (Internal Rate of Return) than the minimum requirement for a public project in France. In addition, traffic forecasts justified the choice of a tram-like system (SMTCAC, 1997).
Project Locality and Market Geography
Caen's TVR is an urban public transport project. The project also involves the tram’s integration into the urban public transport system of Caen through network integration (connection with bus lines and to some extent with suburban buses and trains), operational integration (bus lines are expected to shift to achieve a better organisation of the entire network).
Finally, the private sector is expected to take initiatives that would increase ridership.
Procurement & Contractual Structure
Tendering
There were two separate tendering procedures:
- Public works, initiated in February 1993, which ended with the signature of the public works concession in July 1994;
- Public service, initiated in September 1994, which ended with the signature of the public service concession in October 1997.
It should be noted that this second tendering procedure had some delays linked to political changes in the municipality of Caen. For some time there was some uncertainty about the realisation of the project, although in the end it went ahead (Chambre régionale des comptes, 2004).
Each tendering process was conducted as a classical two stage tendering process with negotiations.
For the public works tendering, at least two candidates submitted an offer.
For the public service tendering, two expressions of interest were received and both candidates were allowed to tender for the contract. But this time only one candidate submitted an offer (Chambre régionale des comptes, 2004).
Contract Structure
There are two separate contracts:
- One for the public works concession for financing the construction of the TVR, preparing the structure and installations, testing and development of the rolling stock as well as its approval, and heavy maintenance of TVR; and
- One public service concession for running the whole bus network, doing the daily maintenance of the TVR and the whole maintenance of the bus network. This concession is a delegation of public service and follows therefore the regulation defined by the Sapin Law of 29 January 1993.
With respect to contractual obligations, the private sector is responsible for the:
- Design, financing, building, operation and maintenance of the TVR line;
- Operation of the overall urban transport network (TVR and bus);
- Maintenance and renewal of assets allocated to public service
Finally, at the end of the concession period, the project is to be transferred back to SMTCAC.
The public works concessionaire (STVR) is funding the project as follows (Chambre régionale des comptes, 2004) :
- 1,6 percent of equity;
- 55,9 percent of external funding, loan contracted with an Austrian-German banking consortium (main bank : West LB);
- 42,4 percent of capital subsidy (22,3 percent from the organizing authority, 17,4 percent from central state, and 2,7 percent from
the municipality of Caen).
In addition, the public service concessionaire will collect revenues related to traffic (tickets). 90% are for its -own revenues and 10% are to be transferred to the public works concessionaire.
SMTCAC obligations are determining transport policy and public service objectives, defining the conditions of organization and functioning of the public service, and determining pricing policy (decisions on fares).
SMTCAC is also involved in financing through:
- A capital grant of 22,3 percent of the construction cost;
- An annual subsidy to the public works concessionaire (EUR15,9 M at June 2002 prices);
- An annual subsidy to the public service concessionaire.
The public partner pays the subsidy to the banking consortium and the banking consortium gives the difference between the subsidy and the monthly loan repayment back to the public service concessionaire.
With respect to project preparation, SMTCAC had made studies to define the tramway project. Hence, the project was described in the urban transport plan and defined for the tender.
Clauses in the contract indicate when it has to be renegotiated and the procedure for renegotiation.
Risk Allocation
The contract defines the obligations of each party in terms of design/construction, maintenance, operation, financial aspects etc. as described below (SMTCAC, 1997 and Chambre régionale des comptes, 2004).
Risk concerning the technological system and construction problems are taken by the private partner. Only archaeological risk are capped. Maintenance risks are mostly taken by the private partners, and are shared between the public works concessionaire and the public service concessionaire. Operating risks are mostly taken by the public service concessionaire.
The public service concessionaire gets the money from ticket sales. Its remuneration by the public body doesn't compensate for any eventual shortfall in commercial revenues unless there is a renegotiation.
Figure 2: Risk allocation
The remuneration of the public works concessionaire is also linked to commercial revenues, because 10% of this revenue has to be transferred from the public service concessionaire to the public works concessionaire.
As in the majority of similar projects in France, the financial risks are mostly taken by the private partner.
Financial consequences of any delays in certification of the technical system have to be taken by the public works concessionaire.
Risks due to changes in the legislation have to be taken by the public sector.
Performance
In the contracts, service quality and performance indicators are defined. The contracts establish also the content of the annual report that the concessionaires have to transmit to the public authority.
The contracts include non-compliance penalties for lack of performance. There are also penalties for delay in the studies, the construction, or the transmission of reports.
An ex-post evaluation is compulsory five years after the beginning of the TVR operation. This will be compared with the ex-ante evaluation used to define the public utility of the project. It has been done by SMTCAC based on a national methodology. Performance indicators are used in the ex-ante and ex-post evaluations. Classical indicators are used for transport supply, transport use, modal split , internal rate of return etc.
The objective was around 48 000 daily trips after three years of operations. After three years of operating the system (2006) there were more than 46 000 daily trips, not far from the target, representing 45 percent of trips on the whole network. Moreover, the construction and operation of the TVR had a positive impact on the whole network, whose use increased by 18 percent between 2002 and 2006 (DGITM-CERTU-GART-UTP).
However, problems with the technical system have had an impact on the availability of the public transport service and as a consequence on the satisfaction of users and the organising authority. According to a decision taken by the urban organising authority in 2011, the TVR will be replaced by a normal tramway in the future. The concessions will probably end in 2014 (public service contract) and 2017/2018 (public works contract). The responsibilities of the different parties and eventual financial indemnities are still to be determined (Mobilicités, 2011 and France 3, 2013).
References
- G. Bonnet, G. Chomat, 2013, The Caen' TVR 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 http://www.ppptransport.eu
- DGITM-CERTU-GART-UTP, Annual survey on exploitation of urban public transport networks (excluding Paris area)
- Chambre Régional des Comptes de Basse-Normandie, Rapport d'observations définitives relatif à la gestion de VIACITES, syndicats mixtes des transports en commun de l'agglomération caennaise (SMTCAC), April 2004.
- SMTCAC, Dossier d'enquête préalable à la déclaration d'utilité publique (DUP), July 1997.
- SMTCAC, Contrat de concession de service public pour la première ligne du Transport sur Voie Réservée (TVR) et pour le réseau de bus, October 1997 (confidential document).
- SYSTRA, Review of French Experience in Private Financing of Public Urban Transport, World Bank Urban Transport Strategy Review, December 2000
Online press articles :
- Caen : 2018, clap de fin pour le tramway sur pneu TVR, Mobilicités, 15th December 2011:
- Tram de Caen : Viacités saisit le tribunal suite au déguidage d'un tram mardi soir, France 3 Basse-Normandie, 21st March 2013:
