Hong Kong’s MTR
The MTR Corporation Limited serves 4 million passengers daily throughout Hong Kong and mainland China. It is one of the preeminent mass transit systems in the world and one of the few to generate an operating profit through its development of real estate and other associated commercial opportunities. Hong Kong’s approach illustrates how MRTs can achieve financial success by combining the development of commercial opportunities with high quality transport services.
Bangkok’s extraordinary levels of traffic congestion suggested that demand was robust enough to support a large, complex rail system. But debt and equity investors in Skytrain eventually suffered considerable losses when actual ridership figures fell well below preliminary estimates. Why? Poor integration with other modes of transport and difficult access to the system for users. Once these problems were addressed, ridership improved.
The Stockholm Metro ran successfully for years under a purely public sector model. In 1990, Stockholm Transport awarded five- to ten-year operations and maintenance contracts for its three metro rail lines, its light rail system, the suburban railway service, and commuter rail services. This approach has allowed Stockholm Metro to improve service and reduce costs through competitive tendering, and to tap into private sector expertise to chart the course for the system’s next 50 years.
Seoul’s Metro Line 9
The Seoul Metro Line 9 Corporation developed, operates, and maintains the Seoul Subway Line 9 Section 1, a 25.5 km subway line with 25 stations. The company benefits from minimum revenue support from the government for the first 15 years of the 30-year concession. The other eight lines are publicly owned and operated. The Seoul Metropolitan Government concessioned Line 9 to a private operator to increase productivity and set a benchmark for the public operators of the other lines.
Dakar’s Toll Road
The $315 million Dakar Toll Road is paving the way toward improved transport and trade in Senegal. The road is being built as a concession, the first experience of its kind on the continent, outside of South Africa. When completed, the Dakar-Diamniadio toll road will connect Senegal’s capital city and the rest of the country, easing the way for tens of thousands of local commuters and greatly improving access to markets for businesses. IFC was lead transaction advisor on the project.
The cost-effective TransMilenio BRT (bus rapid transit) operates like a rail-based system by providing exclusive bus lanes. The operator is responsible for integrating all public transport services for the city. By 2016, TransMilenio will serve 5 million passengers per day along 388 km of main lines on 22 corridors—at a cost of $5 million per kilometer. TransMilenio demonstrates how MRTs can be successful when fully integrated into a city’s public transport services, without the higher costs associated with a rail based system.
São Paulo’s Yellow Line (Line 4)
By 2012, a critical section of São Paolo’s Yellow Line, built by the ViaQuatro consortium, will be 12.8 km long. The concessionaire has spent $450 million on equipment and rolling stock, and estimates that its total investment will reach $2 billion during the 30-year operating contract. During the opening celebrations, officials predicted that São Paulo’s urban rail network would reach 420 km by 2014. The Yellow Line was implemented as a PPP to share development and operational risks with the private sector and to reduce the state government’s capital expenditure, allowing investment in other priority projects.