High-speed Rail Roundup

Link: Bullet train hits a new barrier » Ventura County Star

Bullet train hits a new barrier

* Posted May 2, 2010 at 3:17 p.m.

Leaders of California’s high-speed rail project tell us it’s on track and that the state’s residents can confidently look forward to a future of super fast bullet trains whisking them from one end of the state to the other at airline-like speeds.

However, the state auditor’s office is saying officially what outside analysts already had concluded — the bullet train isn’t ready to roll, lacking the tens of billions of dollars in federal and private financing the project will require.

California voters have approved a $9.95 billion bond issue, but it’s supposed to pay for no more than 50 percent of construction costs. With total estimates running beyond $40 billion, the bond would be good only for a quarter at most.

The High-Speed Rail Authority is hoping for a big wad of federal funds — about half the total — but so far has received just a fraction, with no commitments for any more.

However, the biggest unknown, as state Auditor Elaine Howe points out in a report issued Thursday, is whether private investors would be willing to commit at least $10 billion.

The enabling legislation says the bullet train will not have any state operating subsidies, but the authority’s own documents say that private investors need “revenue guarantees” to protect their investments. That raises the specter of operating subsidies, as another recent report by the Legislature’s budget analyst also points out.

“To plan adequately for private investment, the authority should further specify the potential cost of revenue guarantees and who would pay for them,” the auditor’s report recommends.

An indication that something’s amiss is found in the defensive reaction of Curt Pringle, the Rail Authority’s chairman, to the auditor’s report, calling its title “inflammatory” and “overly aggressive” and promising that the questions will be answered as the business plan is finally revised.

There is a fundamental conflict between voters being told that if they approved the bonds the bullet train would be self-supporting, without operating subsidies, and the apparent requirement for “revenue guarantees,” which probably could come only from tapping a state budget that’s already awash in red ink and/or imposing some new special tax.

The auditor’s report, coming just weeks after the legislative analyst’s report and a critique by the Senate Transportation Committee staff, indicates that specific route planning, now under way throughout the state, should be placed on hold until the financial kinks are worked out — if, indeed, they can be.

The danger — and perhaps the hope of the state’s bullet- train advocates — is that the rail authority will make so many commitments that the state will be politically compelled to pony up more money for construction and operation, regardless of financial viability.

Big public projects often become financial sinkholes via that process.

— Dan Walters writes for the Sacramento Bee. E-mail him at dwalters@sacbee.com.

Link: http://www.asahi.com/english/TKY201005020176.html

High-level delegation pushes
Shinkansen in U.S.

THE ASAHI SHIMBUN

2010/05/03

The government and a coalition of large companies have embarked on a
major lobbying effort to try to secure a large slice of U.S. high-speed
rail projects, totaling 14,000 kilometers, for Japanese industry.

With fierce competition expected from across the world, Seiji
Maehara, minister of land, infrastructure, transport and tourism, led a
high-powered delegation to Washington last week.

He said the struggle for the multi-billion dollar contracts would be a
political as well as a business dogfight. "Unless the government and
industry work together in unity, even excellent technology will not be
adopted. It's a power game," Maehara told journalists in Washington on
Friday.

The delegation included three heavyweights from Japan's railway
industry: Yoshiyuki Kasai, chairman of Central Japan Railway Co. (JR
Tokai), Satoshi Seino, president of East Japan Railway Co. (JR East),
and Tadaharu Ohashi, chairman of Kawasaki Heavy Industries Ltd.

U.S. President Barack Obama has pledged to provide $8 billion (750
billion yen) in subsidies to finance new high-speed railway track across
the country. Bidding for some of the lines is expected to start later
this year, and operations are expected to begin from the mid-2010s.

But decisions being reached now about the framework for the projects
could decide whether Japan plays a leading role in America's new railway
era, or is a bit part player.

Among the key issues being decided are the safety standards for the
new lines.

Among the biggest rivals of Japan's Shinkansen are France's TGV-POS
and Germany's ICE 3, which run at maximum operating speeds of 320
kilometers per hour, faster than the Shinkansen's 300 kph.

A major plus for the Shinkansen is its environmental friendliness.
The Shinkansen is half as heavy as the French and German trains and
therefore emits significantly less carbon dioxide.

But the reason for the Shinkansen's light weight is that it has been
designed with no consideration for accidents at crossings, because it
operates on its own dedicated lines. The French and German trains are
heavier because they are made to withstand such crashes. If the United
States adopts similar safety standards to those in Europe, the
Shinkansen bids may never get out of the sidings.

Meanwhile, a key strength of the Chinese and South Korean consortia,
backed by government affiliated financial institutions, is their solid
funding.

According to Sumitomo Corp., companies from France, Germany, Canada,
Spain, Italy, China and South Korea will bid for the U.S. orders. On the
Florida high-speed line alone, 22 companies are vying for the business.

Japan's sales pitch seems likely to stress a coordinated approach by
operators and manufacturers. Maehara repeatedly used the word "unity" at
Friday's news conference.

The delegation to Washington brought together the transport ministry,
JR firms, train manufacturers and trading companies. It represented the
culmination of two years of growing interest in the U.S. high-speed
rail project from Japanese companies.

Kawasaki Heavy Industries, which has provided trains to the United
States since the 1980s and operates two factories in the country, and
Mitsubishi Electric Corp., which makes train motors and has a plant in
central Mexico, are the leading lights among manufacturers.

Sumitomo Corp. and other trading firms have been bringing these
manufacturers and operators into bid teams and lobbying the U.S.
government and other organizations.

Among the train operators, JR Tokai has been particularly
enthusiastic. In January, Kasai announced that his firm would market its
conventional and maglev Shinkansen technologies to the United States.
Though JR Tokai projects steady profits from its Tokaido Shinkansen in
the future, the number of passengers is unlikely to grow.

The company intends to seek orders in the Florida railway line and
the Washington-Baltimore line.

JR East, meanwhile, is expected to focus on a California project and
the Chicago Hub Network project. It has stable operations in Japan and
had previously been cautious about expanding overseas, but Seino's
presence in the latest mission to the U.S. is a sign that the firm aims
at entering the U.S. market. The leading role now being played by the
government is a significant departure.

In March, Yoshito Sengoku, minister for national policy, announced
that the Japan Bank for International Cooperation, a public financial
institution, would extend loans for railway projects in developed
countries. The move will significantly strengthen Japanese firms' hand
in bid negotiations.