First of all, I would like to show several examples of urban rail system. The upper figure shows a very typical suburban commuter rail system with largest transport capacity and high travel speed. The lower one is an example from Singapore on subway system for short distance travel in cities.
The role of urban rail is to save cities from road traffic congestion, establish better environment and realize a more effective city structure in terms of economy.
The stages of the development of rail system can be classified into these three stages: planning, realization, and after realization (management or operation). All of these are important, but I'd focus on the stage 2, namely realization.
There are many important checked points before realization, such as clearing out of technical problems, suitable environmental treatment, building public consensus for construction, effective financial schemes, long-term and reasonable compensation for right of way, efficient management organization. Most of them are leading to financial and organizational features. Therefore, the controversial discussions have been done for long years. Some said public work was better. Some other said private work was better.
After many positive and negative experiences all over the world, including Japan experience, PPP (private-public partnership) comes to seem the best way, or best solution for the realization. Why PPP?
The reason will firstly be that the private sector usually can provide better economic outcome through their profit-seeking activities. Secondly, the responsibility of public sector is still important in terms of safety, environment and other social consideration. And the cooperation of the two often provides better quality of outcome, reduce the risks of projects, and improve financial attractiveness of the projects.
Now I am going to show you our experiences of PPP in urban rail project. There are several typical patterns in rail development in Japan.
The first one is the inauguration of commuter rail services on long distance line of the national railway, which was realized in the early stage of the history of the urban rail system in Japan. The investment and operation cost, which was required for better commuter services, had to be covered by the profit generated from long distance passenger and freight transportation at the beginning. However, these commuter services now become the main corridor in metropolitan areas, such as Tokyo or Osaka, and provide the core of the profits of the railway companies.
The second typical case is the rail development by private firms. The most important point of this type is the combination of rail development and regional development. This type of combination could provide transport accessibility for houses and the value of the area around the station is much improved for this reason. This is the development benefit of transport projects on real estates. And the real estates bring financial profits. And if you transfer this profit into rail development, you can finance rail projects much better. This is the internalization of development benefit.
And thirdly, you can expect passengers in the early stage, and this will also improve financial resources of the project.
