The three firms bidding
Business editor Sion Barry takes a look at the three companies that are still in the running to become the next operator of rail services in Wales
Following the decision of German-owned Arriva Trains Wales, through bidding company Arriva Rail Wales, to pull out of the bidding process to operate the next Wales & Borders rail franchise, the remaining contenders are:
Hong Kong-owned MTR Corporation. Dutch-owned Abellio. KeolisAmey – a joint bid between French transport company Keolis and consulting and infrastructure support services firm Amey.
As well as running the next Wales & Borders franchise from October next year – which also includes rail services crossing the border into England – the winning bidder will also design and build the next phase of the Welsh Government’s public transport Metro project in south Wales with electrification of the core Valley Lines.
When you factor in operating subsidies, investment in new electrified track, rolling stock and stations, as well as potential further phases of the Metro, it could be worth £5bn over the next 20 years.
The current rail franchise is run by Arriva Trains Wales.
It is not certain that all three will submit final bids, but having committed so much money, resources and energy to get to this stage, it is unlikely that any would walk away so close to next month’s deadline.
The complex bidding scoring process, against a wide range of criteria, will be overseen by the Welsh Government’s transport body Transport for Wales.
But all three know the financial envelope of the franchise, in other words the profit level they would be allowed to generate from running rail services across Wales over the next 15 years.
The three will have to come up with solutions for the funding of new rolling stock, in particular what mode will be used on the Valley Lines, which could see light trains or trams pressed into service once the lines are electrified.
The winning bidder should be known early next year before final contracts are signed in the early summer.
ABELLIO
Abellio is a subsidiary of Dutch Railways (Netherlandse Spoorwegen) which operates train franchises in the UK and Germany, as well as buses in London and the Netherlands.
It is currently the fourth-largest passenger rail operator in the UK, running the ScotRail, Merseyrail and Greater Anglia franchises.
And it is about to start operating the new West Midlands franchise with partners JR East and Mistui.
In the UK it handles 1.2 billion passengers a year, with 2,058 trains and 1,455 buses. It employs 13,000.
Its partners on the bid are AECOM and Carillion.
A spokeswoman for Abellio said: “We are very excited to participate in this bid and have been spending a huge amount of time listening and consulting with as many stakeholders as possible across the Wales & Borders region.
“We recognise that this is a unique opportunity to deliver a muchimproved public transport system across the network. We share the vision of the Welsh Government and Transport for Wales to deliver a railway that the Wales & Borders region can be proud of.
“We have a team of over 50, based in Cardiff, who have spent the best part of two years working on our bid, which is centred on delivering exciting and transformative transport solutions.”
MTR
Set up in 1975, Hong Kong-based MTR Corporation is one of the world’s leading transport companies with interests globally from Australia to Sweden.
It is bidding through company MTR Corporation Cymru.
In a partnership with FirstGroup from the summer, it began operating the South Western Railways franchise, one of the busiest in the UK which handles around 235 million passenger journeys a year.
First MTR South Western Trains has pledged to oversee a £1.2bn investment programme on the network. Other interests include: Operating Sweden’s Stockholm Express and the MTR Express linking the capital with Gothenburg.
Jointly operates the first London Overground concession for Transport for London and the first phase of London’s Crossrail rail project.
On its website the company says: “MTR Corporation is keenly interested in this exciting opportunity to develop and transform services in Wales so that rail can make a full contribution to economic growth and successful communities.
“We share the widely held aspiration for rail investment to drive sustainable economic growth and support communities in Wales, and will Electrification of the Valley Lines, for which £734m has already been ring-fenced in the £1.2bn City Deal for the Cardiff Capital Region, is not expected to be completed until 2022-23 – if the winning bidder puts forwards a heavy rolling stock solution.
But in theory, if a tram solution is approved it could see services commencing on some of the network from as early as 2021. be applying all of our experience in tendering for the new Wales and the Borders franchise.
KEOLISAMEY
Keolis is a global passenger transport business working in 16 countries, supporting three billion passenger journeys and employing 56,000 people.
VALLEY LINES ELECTRIFICAITON
The funding for the project includes £125m from the UK Government, around £120m from the European Regional Development Fund (although not yet signed off ) and the rest from the Welsh Government’s capital budget.
The Welsh Government also wants the project to have a reduction or full exemption from VAT. It is in discussions with the UK Government on the issue.
Although there is a VAT provision
It is the UK’s largest light rail operator with the single biggest network in partnership with Amey – the Docklands Light Railway.
It also operates Nottingham’s tram network.
It delivers a third of rail passenger journeys on the Thameslink, Great Northern, Gatwick Express, Southern, London Midland and Southeastern railway networks. in the Barnett Formula, it is not clear if it is flexible enough to account for big spikes in VAT incurred from large capital projects.
And while initial work has been carried out, the final cost of the project – and it could go up – will not be known until a full assessment is made on the costs of putting up the wires and required associated infrastructure work, such as increasing the height of bridges etc.
In the summer it started a 10-year contract to run the Greater Manchester Metrolink light rail network.
Amey is a leading infrastructure management company.
On its website it says: “KeolisAmey is a partnership between two international transport and infrastructure management specialists to bring a transformative approach to the development and operation of the Wales and the Borders franchise and the South Wales Metro.
“The creation of the Metro provides the once-in-a-lifetime opportunity to develop south Wales’ transport network.
“By modernising and increasing connections within the region and beyond, it will ease access to travel for everyone, helping to create sustainable economic regeneration.
“This combines with a new franchise for the whole Wales and Borders area to give a unique opportunity to innovate as we link communities, businesses, our places of work and leisure.”