Spain tenders €2.3bn of high-speed rail

The two tenders out to market for the Madrid-Galicia high-speed rail line are Spain’s biggest ever contracts in the high-speed rail sector.

Spain’s transport ministry, Fomento, has launched two joint tenders for the construction and maintenance of a high-speed railway line and related facilities between Madrid and Galicia, a region in the north of Spain, bordering Portugal.

The two public-private partnership (PPP) contracts, worth a combined €2.3 billion, are Spain’s largest-ever deals in the high-speed rail sector.

The larger PPP contract is worth close to €1.7 billion and will require the private partner to build and maintain railway and telecommunication facilities along the full length of the line.

The smallest of the contracts, worth just north of €647 million, will call on the private sector to build and maintain a greenfield stretch of the Madrid-Galicia line connecting Olmedo, in central Spain, to Santiago de Compostela, in the north.

The outstanding portions of the Madrid-Galicia line, worth over €3 billion, will be built via public procurement, Fomento announced. Originally, though, the close to €6 billion Madrid-Galicia line had been envisaged as a PPP in its entirety, raising eyebrows about the size of the contract.

Construction works for the 400-kilometre-plus line are due to conclude in late 2015, leaving the concessionaire of the Olmedo-Santiago portion with an outstanding 25-year contract to maintain that stretch. The concession length on the telecommunications contract is shorter, at 20 years following construction.

Like all projects that form part of Spain’s €17 billion PPP programme, the private sector will receive availability payments – public contributions paid in exchange for making an asset available in good condition – throughout the length of the maintenance contracts. The European Union will also contribute more than €128 million to help fund the Madrid-Galicia line, with the European Investment Bank expected to chip in on the debt side.