UK: Supra-national rail asset financing body Eurofima is urging British policymakers to sign its convention, which would facilitate UK rail organisations’ access to cheaper funding for rolling stock and other equipment.
Speaking exclusively to Rail Business UK at Eurofima’s headquarters in Basel, CEO Christoph Pasternak said the organisation was targeting the UK as one of its growth markets in light of ongoing changes to its core European business.
Pasternak explained that Eurofima was organised on a membership model; its current shareholders comprise 26 organisations — mainly state railways — from 25 member countries across the continent. Countries who sign up to the Eurofima Convention can get rapid access to loans at competitive rates; typically these are used to finance rolling stock for regional and suburban rail services operating under Public Service Obligation arrangements.
However, the liberalisation of European rail markets under successive EU legislative packages means that some of the state incumbents’ market share is likely to shift to new entrants over time. This could provide Eurofima with an opportunity to grow its membership base.
Post-Brexit crunch
According to Pasternak, the UK is an increasingly promising market because Brexit had caused a shrinking of access to asset finance through EU-backed institutions such as the European Investment Bank. This in turn had impacted both devolved authorities’ ability to fund new trains directly — as Merseytravel had done with its Stadler Class 777 EMU fleet, which was partly financed through EIB. The rising cost of money on the capital markets has also hindered wider rolling stock procurement options, added Eurofima’s Head of Financial Planning & Analysis and UK market specialist Tariq Sawyer.
‘You can see the effect these issues are having in the market’, Sawyer told Rail Business UK. ‘This is especially the case when we look at the issues British factories have in securing rolling stock work, either refurbishment or new build. We think we can help with that by providing financing at attractive pricing and tenors — but it needs the British government to join via the convention.’
Eurofima is not affiliated to the EU, meaning that it would be well placed to step in to replace some of the financial instruments to which access was lost after Brexit. Its staff are holding a series of meetings with British officials, both from the Department for Transport and from the various devolved transport bodies.
While Eurofima’s established business model sees financing arranged between its state railway shareholders, the body is increasingly open to diversifying its remit to allow organising authorities from devolved administrations to join.
Rail Business UK understands that Transport Scotland has already been exploring how it could use Eurofima funding to procure various fleets of new trains. However, the Scottish government has so far been waiting in the hope that the UK would first sign the convention.
‘Everyone we have spoken to in the UK thinks this is a good idea and can see a clear benefit in terms of easing the burden on the public purse’, Pasternak reported. ‘But we just need someone in government to pick up the pen.’
- Asked by Rail Business UK about reports that it was planning to establish an in-house Scottish rolling stock business, Transport Scotland said it was ‘looking to find the best balance between maximising value for money and making our railway attractive and accessible to new as well as existing passengers. This requires us to consider all of the available options to deliver quality rail services.’
