1. IRAN TRANSPORTATION & LOGISTICS FORUM
Iran Rail Transport,
Moving toward PPP
(A vertical separation approach)
Majid Babaie
Secretary General,
Guild of Rail Transport Companies and Related Services

2. Shift to Privatization
2005 (1384)
Vertical Integration
A public railway
Vertical Separation
Toward PPP
Need to private sector’s investment
Low Productivity of services & assets
Low labor productivity
Low quality of services
Low market share

3. VI VS Degree of EOS Vertical Integration vs. Vertical Separation
Balance (Regulator, Size, Investment Cost…)
Degree of EOS VS
Degree of market pressure and openness

4. pros and cons of Vertical Separation in Iran’s rail industry (privatization and regulatory reform)
Broke down barriers to entry in industry
An appropriate way to curtail the monopoly power of “natural monopolies”
Labor productivity is relatively higher than VI
More intensive use of capacity
More flexible management
An independent regulator does not exist. No certain arbitration unit.
Government may pull out national budget from the sector.
Government don’t like to withdrawal from operational tasks.
Loss of Economies of Scale

5. Rail market share growth depends on? (Goal: 30% + 20%)
Developing new tracks?
Providing new rolling stock?
Increase of prices?
Increase of rail budget?
Increase demand for rail?
???
Appropriate Policymaking,
A Sustainable PPP structure,
More productivity,

7. Rail transport performance (2006-2015)
Index
Unit
2006
2009
2012
2015
%2015/2006
Tracks Km
8595
9482
10223
10459
21.6%
Tonnage
M/ton 33
32.8
34.3
35.7
8.2%
Ton-Kilometer
Billion
20.5
20.2
22.6 25
22%
Transit Tonnage
1000/ton
1500
1487
906
1435
-4.3%
Passenger
Million
21.3
27.7 27
24.4
14.5%
P - Kilometer
12.5
16.8
17.2
14.9
19.2%
Allocation of development credits %
78.6
78.9
53.9 39
50%
Track productivity
M/ton-passenger K
3.8
3.9 0%
Freight wagon productivity
1000/ton-K
1044
980
1100
1150
10.1%
Passenger wagon productivity
M/p-k
10.4
11.8
11.3
20.2%

8. Share of freight revenue % Locomotive owner(70% public)
Value added tax
Wagon owner
Locomotive owner(70% public)
Access charge
year
25%
23%
52%
2009
22%
21%
57%
2010 2%
54%
2011 5%
18%
2012 6%
31%
41%
2013 7%
29%
30%
34%
2014 8%
32%
2015
8.2%
31.3%
32.4%
28.2%
2016
مرجع: گزارش رقابت پذیری حمل بار ریلی, معاونت بهره برداری و سیر و حرکت راه آهن, اسفند ماه 95

9. (Train-Km per each km of main tracks)
Track productivity
(Train-Km per each km of main tracks)
1000/Train-Km
نام کشور
ردیف
27.6
Japan 1
20.2
China 2
19.7
England 3
16.9
Germany 4
12.1
Russia 5
11.5 EU 6
10.5
World 7
9.9
France 8
8.1
Kazakhstan 9
6.2
Iran 10
مرجع: گزارش رقابت پذیری حمل بار ریلی, معاونت بهره برداری و سیر و حرکت راه آهن, اسفند ماه 95

10. Freight wagon productivity rate
(Ton-Km per each ton of wagon capacity)
Year
1000/Ton-Km
Annual Growth%
Comments
2001 16
3.2%
2002
16.9
5.6%
2003
19.2
13.6%
The highest record
2004
18.4
-4.2%
2005
15.9
-13.6%
Starting new PPP
2006
16.8
5.7%
2007
14.9
-11.3%
The lowest record
2008
15.1
1.3%
2009
15.8
4.6%
2010
16.4
3.8%
2011
-7.9%
2012
16.1
6.6%
2013
15.7
-2.5%
Start point of the 11th government
2014 17
8.3%
2015
17.3
1.8%
2016
18.3
5.8%
16.6% increase in wagon productivity
in 3 years
مرجع داده ها: گزارش رقابت پذیری حمل بار ریلی, معاونت بهره برداری و سیر و حرکت راه آهن, اسفند ماه 95

11. Starting new PPP
16.6% more productivity
در سال 82 یعنی دو سال قبل از شروع خصوصی سازی بازای هر تن ظرفیت اسمی واگن های باری معادل 19,200 تن کیلومتر عملکرد جابجایی بار محقق گردیده است. همین شاخص در سال 95 معادل 18,300 تن کیلومتر بوده است. این یعنی با گذشت یک دوره 13 ساله که تمام ایام خصوصی سازی را نیز در درون خود داشته است عملیات سیر قطارهای باری نه تنها بهبود نیافته بلکه 4.7% بهره وری واگن های باری کاهش نیز یافته است. البته خوشبختانه طی سه سال اخیر اقدامات اصلاحی خوبی آغاز گردیده بطوریکه همین شاخص بهره وری واگن در سال 95 در مقایسه با سال 92 به میزان 16.6% افزایش داشته است.
مرجع داده ها: گزارش رقابت پذیری حمل بار ریلی, معاونت بهره برداری و سیر و حرکت راه آهن, اسفند ماه 95

12. Rail Transport Contribution 2005-2016
Years
Total
Ton-Kilometer
(Billion)
Access Charges Paid by Rail sector to government
(Billion $)
Fuel consumption Saving
Other savings  
265
1.5
3.5
Billions of savings by Externality and side effect Costs in compare to road

13. Rail Market Share Growth Requirements
Facilitate Competition
Facilitate rail Transport
External Requirements
Internal Requirements
Harmonization of rail and road access charge
Uniform subsidies for rail and road fuel consumption
Move to market Solutions
Increase Productivity
Setup Regulatory Body
Eliminating investment barriers by private sector
More competitive advantages for rail
More market share and growth for rail
Based on a Roadmap

14. Results of VS imperfect restructuring?
No separation between governance and operational activities
Government approach not changed
More intervention by government without any limitation
Real Private companies not entered (more government linked companies)
Unreliability space is the most important obstacle for new investors
Policymaking is a forgotten role of government
There is no enough authority for rail private companies to improve productivity by their capabilities
As a whole internal and external requirements for rail development is not available at both public and private sides

15. US railway, A successful reform

16. US rail performance after 1980 reform
Index
1980
2009
Change%
(Last year/Base year)
Rail Market share%
27%
2007 – 39%
+45%
Ton-Mile(Billion)
900
+100%
Revenue to Operational cost 60
+500%
Cost index
+110%
Price index
2007 – 65.5
-35%
Price to cost index
-61%
Return on investment
2.93% 8%
+173%
# of Personnel
450,000
,000
-67%
Human resources cost index
100
+150%
Revenue by each Person($)
792
4177
+427%
Fuel consumption cost index
+30%
Revenue by each gallon($)
228
480
Revenue by each track Km($)
3297
9530
+189%
Accidents per each million train-mile
11.4
2.6
-77%

18. Performance of Class I Railroads 1964-2005
Source: Railroad Facts, AAR

19. Thanks for your attention
IRAN TRANSPORTATION & LOGISTICS FORUM
Thanks for your attention