Minister of Transport And Communications Torild Skogsholm
Information meeting,
1 April 2004,
Oslo, Norway

Competition for running passenger rail transport in Norway

First of all, I would like to welcome you all to this meeting for train operators. It’s a great pleasure to see so many of you gathered here to day to attend this meeting! It is also an inspiration to see that so many companies are interested in competing for running passenger rail transport in Norway.

The Norwegian Government gives high priority to rail transport, and the introduction of competition to the rail market is the beginning of a new era in Norwegian rail as well as an opening for new operators.

As you can see from slide 1, the Governments goals of competition will contribute to increased attention to railservices. It exists a potential for more effective use of resources provided for the public transport, and consequently increased quality of services. Introduction of competition is part of the development of a more cost effectice railservice to the passengers and the goal is not competition in itself, but to achieve increased use of public transport.

I intend to say a few words about the background for introducing competition to the Norwegian market. I will also describe the Governments goals with the process and, most important, give my view on why it should be interesting for your company to set up in the Norwegian market!

The background for introducing competition

Today the Ministry spends 1.4 billion Norwegian kroner on purchasing unprofitable rail traffic from Norwegian Rail (NSB). Publicly funded passenger train services include local traffic around the big cities, the intercity traffic in the Skien-Halden-Lillehammer triangle, and regional and local trains. Public funding of local traffic and intercity services have mainly environmental and regional justifications, including assistance to the road system around the big cities and the most populated areas in the central part of eastern Norway.

As a result of the latest development with increasing competition from air traffic and express buses, I aim to include the night train traffic on the Bergen line and the Dovre line in the public purchase agreement from the year 2004.

All traffic which now is purchased through direct negotiations with NSB AS, will be opened to competition. Furthermore, we will also open all commercial passenger traffic to competition as part of packages. Assistant Director General Fredrik Birkheim Arnesen will give more details on this later to day.

Passenger train transport increased considerably during the 1990s. The growth was particularly strong for rush hour traffic, local traffic and intercity traffic. Publicly funded traffic decreased in the period 1998-2003, but from the second half of 2003 it increased again and this trend continues in 2004. At the same time, as you can see from slide 2, the amount of public money spent on the purchase of rail services has increased considerably – 30 percent, without seeing an equivalent improvement in the services offered to passengers.

Why introduce competition to the Norwegian market?

The Government wants to contribute to a positive development of rail transport in Norway in the future. As you can see from slide 3, one of the political goals is to introduce competition in order to secure a more innovative railway.

Competition will contribute to creating diversity in rail transport services, as it already has done for air and bus transport, with more players to challenge each other. Competition will also enable us to identify the costs associated with the different lines and services, and to attain considerable knowledge about whether we today spend the money in a rational manner.

All experience from other countries that have introduced competition for passenger rail transport, shows that competition gives more and better rail services in return for the public money spent on purchasing them.

In the National Transport Plan (NTP), the Government proposes that the grants for the public purchase of train traffic should remain stable for the next ten years. This implies that my goal is not to use competition in order to cut the budget for rail services, but in order to contribute to better and more rail services for the public money spent! The money the Government saves by introducing competition will be used to improve the railway services.

Why set up in the Norwegian market?

As you can see from slide 4, it exists a lot of reasons for setting up in Norway:

• Firstly, the Government has made a long-term plan to establish a lasting and stable market for competition in Norway. In the future, it will be possible to compete for all the passenger train traffic on the Norwegian railway network. We plan for the future and aim to meet the operators justifiable need for long-term planning
• Secondly, the Government looks upon rail services as a high priority area. The Government has decided that during the next ten years, it will spend 60 billion Norwegian kroner on infrastructure and purchase of services. We believe that this shows a determination to give focus to the railways
• Thirdly, the Government is concerned about organizing a neutral, non-discriminatory and dynamic regime
• Fourthly, there is a huge potential for improvement on the railway services that are being offered today. Consequently, there can be no doubt that there is a basis for traffic growth as a result of better rail services
• Fifthly, there is a high degree of public awareness connected to the railways among the Norwegian people. A lot of people are engaged in the railways success, for instance the local communities situated along the Gjøvik line
• Further, rail services are a necessity in the Norwegian transport market – when it comes to dealing with the challenge posed by growing capacity demands, the railways present the most future-oriented solution
• Another reason for setting up in the Norwegian market, is that this will give operators further insight into the Scandinavian market, where the liberalization process is moving ahead
• The Government has also started to adjust the Norwegian railway in order that it can be part of the unified European railway system, which will make it easier for operators to compete in the whole of Europe - also in the Norwegian market
• When it comes to the composition of the rail traffic packages, the size is obviously of importance. The packages have to be of a certain size in order to be attractive for you as operators. This is precisely the reason why the Government has decided that the next packages to be opened for competition after the Gjøvik line will be the Bergen line and the Sørland line
• The Government has also been concerned that the next two packages should have a regional central point. In this way, it will be possible for operators to expand from a separate region

As you can see, the Norwegian Government has placed considerable emphasis on organizing a lasting and attractive market for competition in Norway, and we welcome all of you to participate!

Security – a first priority

In the requirements and conditions that will be laid down for operators that compete on the Norwegian market, security will be given first priority. Only companies that meet pre-determined security standards and requirements will have the chance of winning. The company that wins the competition will have one year from signing the contract until traffic start to take care of security issues in the best way possible. The Government has also noticed that security has been taken care of in a satisfactory way in other countries where new operators have moved in.

Closing remarks

I believe in new growth for the railway market – and that a modern society where most people live in urban areas will choose to travel more and more by train. In the years to come, we will continue to give high priority to the railways – with new double tracks in densely populated areas – with stations and junctions – and with creativity and increased diversity in the railway sector.

Improved public transport is a primary goal for the Governments transport policy. With increased public spending on public transport and more diversity and competition in rail transport, the way should be paved for new growth possibilities for rail transport in Norway.

I wish Norwegian Rail (NSB) and all the other operator companies the very best of luck in the competition. The aim must be to offer passengers such a good service that they prefer the train to other means of transport.

Thank you for your attention!

Power Point presentation by Minister of Transport and Communications Torild Skogsholm, information meeting, 1. april 2004