Nottingham Express Transit
The following article is reproduced from the August 1998 edition of Tramways & Urban Transit
© Pat Armstrong and Tramways & Urban Transit, 1998.
There is a map of Line 1 of NET at the bottom of this page - it is wide, you will need to scroll horizontally to see all of it!
The next British light rail scheme to get the go-ahead should be Nottingham Express Transit - Pat Armstrong, General Manager of Greater Nottingham Rapid Transit Limited, kindly agreed to take time out from answering H.M. Treasury's questions to answer some put by Bob Tarr on behalf of Tramways & Urban Transit's readers:
Bob Tarr - Who are the partners in the "Greater Nottingham Express Transit" consortium and what do they each bring to the party?
Pat Armstrong - Nottingham Express Transit (NET) is promoted by Greater Nottingham Rapid Transit Ltd, a joint venture set up by Nottingham Development Enterprise (a private sector led organisation working for the economic well being of the conurbation), Nottingham City Council and Nottinghamshire County Council. The public private partnership has brought widespread consensus for the project and the application of broad skills through the secondment of specialist staff from engineering, banking and other companies working alongside local authority planning, highways, legal and finance officers. The two Councils will contract directly with the concession company, monitor its performance and make payments. Meanwhile consideration will be given to the roles of the GNRT partners in developing further LRT lines.
Bob - I understand that Adtranz intend to use their stunning Eurotram for Nottingham - putting the city on a par with Strasbourg - is that right? How many of them will there be in Nottingham? Will they look the same?
Pat - Preferred bidder for the project, the Arrow consortium comprise Adtranz, Tarmac, Transdev and Nottingham City Transport. Arrow's vehicle proposed for NET is the Eurotram with minor changes, including a tighter turning ability, from the vehicle currently operating in Strasbourg. There will be 15 trams.
The first of 27 additional ADtranz Eurotrams trams for Strasbourg, made in Derby, England has now (13 July 1998) been delivered - this photo shows them leaving the Derby factory on low-loaders en route for Strasbourg. The tram system in Strasbourg has been so successful that two years after opening the city decided to open a second line to double the capacity. 26 York-built trams were supplied for Line "A", 27 are now being built at Derby for the 12 kms Line "B" which will open at the end of 1999. Maybe the next batch will only have to go down the road to Nottingham? photo - ADtranz
Bob - How much will your scheme cost to build? Where is the money coming from - how much from the public sector? how much from the private sector?
Pat - NET will be funded as a DBFO (Design, build, finance, operate) scheme through the PFI (Private Finance Initiative) with Arrow securing the capital funds (bank debt and equity) to design, build, commission and operate the system. Arrow will be paid a performance based availability fee for delivery of the service through the life of the concession. The net present value of the 27 year payments stream is £165m. The money would come from central government through the Revenue Support Grant system.
Bob - The name of the game these days is public/private partnerships and Private Finance Initiative. How has this affected what you've done and is it more onerous than applying for Section 56 government grant?
Pat - NET was originally developed as a DBOM project to be funded by Section 56 grant. The change to PFI has involved very significant addition costs on the promoters to develop appropriate financial and legal documentation for what will be the first major transport project (as opposed to a road scheme) to be wholly financed in this way. Bob - When do you hope to get the go-ahead? If you get it then, when will work start on site? And when would you expect the project to come into public service?
Pat - We hope Government will make a decision to award a PFI credit for NET before the end of July. This will enable contract close to be reached in March and the three year construction programme to commence during 1999 with public operation starting in the spring of 2002.
Bob - The Sheffield Supertram had a very hard time in its early days with head-to-head bus competition? Do you have clear plans about how you will avoid that happening in Nottingham? Will you be able to get integration between buses and the new tram?
The Nottingham NET tram will look like this Strasbourg Eurotram, shown on the new ADtranz test track at Derby recently - surely the most stunning looking public transport vehicle in the world?. photo - ADtranz
Pat - Unlike Sheffield, Nottingham has experienced a relatively stable bus market and furthermore the major bus operator is Nottingham City Transport who, with Transdev, will be the operating contractor for NET. The opportunity for real transport integration between the tram and bus modes, including feeder services, common ticketing and joint marketing and common management functions, is a strong plus for the Nottingham project.
Bob - Will there be an entirely new joint company set up to operate the trams or will operation be undertaken by your bus operating consortium member? Will the consortium have an operating concession, if so for how long? Who will own the infrastructure long term?
Pat - Nottingham City Transport and Transdev will set up a new company to operate and maintain NET. This will be contracted to Arrow Light Rail, the concession company. The concession is for 30 years, including the construction period. At the end of the concession the assets will revert to the promoting Councils.
Bob - One of the keys to successful light rail/tramway operation these days is a high level of traffic priority for the tram? Will you get this, and how will it be done?
Pat - As co-promoter for NET the County Council saw its role as Highway Authority as pivotal in securing an integrated transport package with priority for public transport, including NET. Since local government reorganisation, the City Council is now Highway Authority for the streets to be used by NET. The alignment design for NET has included detailed input from the authorities' highway engineers. As a result a high level of traffic priority will be achieved for the trams with the NET control systems being fully integrated with the urban traffic control system.
Bob - For a totally new scheme, getting people to believe your patronage forecasts seems to me to be one of the really difficult hurdles to clear. How have you fared on this? What do you expect patronage to be?
Pat - The patronage forecasts have been subject to independent and commercial review at all stages of the development process. This gives us confidence that the predicted volume of >10m passengers per year will be realised. More importantly, Arrow share this confidence and it is the Arrow companies who will take the patronage and fare income risk.
Bob - When the Conservatives were in power it seemed that the ground rules were - 1.There must be no on-going revenue subsidy from the public sector, only interest/loan repayment on the absolute minimum amount of capital possible 2. All, or nearly all, construction risk and all operating risk must be borne by the private sector and 3. the computed value of the social /cost benefits must massively outweigh the costs, discounted over 20 years or so. Has the new emphasis on the PFI and public/private partnerships changed or re-arranged these requirements of government?
Pat - PFI has introduced a new set of assessment criteria for projects like NET, based on the 'bankability' of the project and the way commercial and technical risks are shared and managed. However, the economic 'value for money' assessments, which were required under the Section 56 regime are still fully tested by DETR and Treasury and have to be met.
Bob - The private sector don't seem to want to look at anything that has 1. any risk and 2. pays less than 20% per annum return on capital. Is this what you've found?
Pat - Our experience is that the banks are very risk averse, but the return on long term debt is not high. Banks expect to get their money back under all circumstances and will 'step in' to take over the obligations of the concession operator should things go wrong. Equity is subject to greater risk and therefore the return sought is higher. In the absence of a clear and long term national policy on transport, investment in transport systems must remain a high risk enterprise. By the time this interview is published hopefully the white paper will have indicated a better prospect.
Bob - What will be your personal role as the project gets under way and when it is operating?
Pat - It is eight years since I was asked to lead the officer team developing LRT in Nottingham. I hope soon to see this work come to fruition with Government approval for funding Line 1 and the start of construction next year. We can then press on to consider the next line!
Bob - Finally, which year would you say would be a really safe bet for our readers to book their annual holidays in Nottingham and ride your new system?
Pat - If Government gives the go ahead this summer, I am confident NET Line 1 will be operating before the summer of 2002.
Pat Armstrong, MA, MSc(Tech), MCIT is General Manager, Greater Nottingham Rapid Transit Ltd and Transportation Service Manager, Nottingham City Council
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