‘30% of rail investment now concentrated in Asia-Pacific'

India may be trying to increase the level of private investment in rail-based transportation system.

But world-over, it is the governments that invest in railway systems, says Mr Dominique Pouliquen, Senior Vice-President, Transport-Asia Pacific Region, Alstom.

Mr Pouliquen, who was recently in India, told Business Line that 30 per cent of railway investment is now concentrated in Asia-Pacific, up from 10 per cent ten years ago.

Excerpts from the interview:

What are the key trends and geographical regions that drive investments in railways?

Economic growth, urbanisation, population are critical factors that trigger the needs for new investments in Railways quite significantly. Asia-Pacific, including China and India, account for about 40 per cent of the population worldwide.

Simply put, the needs for transportation worldwide will be driven by Asia-Pacific sooner or later. Probably ten years ago, the global railway investment in Asia-Pacific would have been about 10 per cent.

However, today 30 per cent of railway investment worldwide are localised in Asia-Pacific including China.

The investment includes railway investment in infrastructure, rolling stock, signalling and activities related to the rolling stocks, such as the after-sales services or life support.

The other big driver for railway business of rolling stock and investment is urbanisation. In Asia-Pacific, we estimate that the number of cities with more than one million inhabitants is about 230. In China, about 42-43 per cent of the population in China is living in cities. By 2030 about 55 per cent of the population are expected to live in cities.

So there is, of course, the political response to address this significant evolution, and railway is part of it, how to move the people from down town to down town, from the surrounding to the down town etc.

Which are the key countries?

In term or ranking, the number one country today is China, followed by Japan and then India, which is very much growing, and then all the other countries.

When I say other countries, the model of investment can be different, but there is Australia, Singapore, Malaysia, Thailand, etc.

In terms of volume, China is probably the biggest country worldwide today in railway investment.

Who is paying for all these investment? Is it State funded?

Worldwide and not just in Asia-Pacific, these are long-term investments — with 99 per cent of investment funded by the State - local or Central Government. Within that there can be categorisation - whether investments are in fixed infrastructure or operations of a system such as rolling stock and the stations.

What is the break-up of railway investments in fixed infrastructure and rolling stock?

Broadly, 80 per cent of global investments go into infrastructure such as the tracks, stations or viaduct. The remaining 20 per cent of investments go towards trains, signalling, tracks and other equipment - an area where Alstom is a player.

So the civil work - which requires 80 per cent of the investment - is fundamentally important.

Can you suggest some interesting models for investment? You said that 99 per cent of the investment is from the State. Do you have any non-Government customers?

Quite limited. In some specific countries, there may be operators. On the rolling stock front, which is where Alstom operates, 90 per cent of our customers are State-owned.

From time to time, some countries have private operators. Broadly speaking it remains quite state owned.

You have countries like UK which has privatised the railway system. However, France remains quite highly State-owned, whether we talk about the metro system in Paris, or the mainline system.

However, you may have some specific cities, where they decide to buy rolling stock, but sub-contract the operations to private operators.

If you take India, we see an interest to move to PPP, and you may have cities considering this type of investment.

In a sense, in China there in no PPP, in Hong Kong there is none, I do not know very much of PPP in Asia-Pacific, so you may have some, in Australia you have a couple of them. The breakdown, with my instinct, it could be about 90-10 per cent.

And when you say PPP, you also have the word public; so you combine the public of the PPP, plus all the public investments, and it remains fundamentally public and State-owned.

What do countries do to balance the fare fixing mechanism in rail-based transportation systems?

It may vary from country to country. I do not see many countries where fares have been a barrier in developing the transportation system.

There is a fair balance between what is acceptable (level of fare) and investments. I also heard that the fares in India have not been increased for nine years. I do not have the details, but being outsider, it is a fair question how is it possible to have a viable system where effectively fares have been stable since 10 years in a country or in an economy which is growing with a significant inflation every year etc.

Fares in any country are adjusted on a yearly basis. But, it does correspond to the local context and the economy.

For example, in the metro in Paris, every year you have an increase of fares.

Could you tell us about the rail-based transportation systems in China and Alstom's business there?

Largely, it is Government oriented as far as the railway transportation system is concerned. But the level of centralisation is low.

In China, there is a Ministry of Railways for the main line complete system. Then there are cities. China has decided to massively invest in the railway transportation system about 15 years ago, and it was a high ramp up. You have an average about 15 new metro lines each year.

China also has its own rail-based industry. They have developed over the last ten years their own capabilities, competencies, and they have their in-house technology - what they call Chinese technology.

You have a number of big companies capable of designing and manufacturing trains in China.

> mamuni@thehindu.co.in

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