For Réseau Ferré de France, responsibility means practising discipline in terms of cost control, which guarantees both durability and secure investments to lay out the network of the 21st century.
cost control
Attaining economic equilibrium
Revenues from usage charges should offset network maintenance and operating costs, which is not yet the case. By defining future usage charge scales, the State hopes to establish reference levels in line with comprehensive network costs.
For 2007-2010, Réseau Ferré de France suggested that grants be allocated in priority to the parts of the network whose costs are structurally higher than the revenues generated by traffic.
Finally, we hope to cross a symbolic asset valuation threshold. Since 1st January 2007, our service providers have been delegated to increase their operating income, and we can expect an increase in domain occupation fees (telecoms and advertising) and more stable asset disposal.
Responsible financing
"Article 4" of the company’s articles of association aims to prevent railway debts that cannot be amortised. This principle is essential to the sustainability of railway infrastructure financing.
According to "article 4", Réseau Ferré de France "can only accept an investment project on the national railway network that is part of a programme upon request from the State, a local authority or a local or national public body if the requesting parties provide their own financial contribution, in order to prevent any negative consequences on Réseau Ferré de France’s accounts while this investment is being amortised".
We carry out a long-term financial evaluation for each project. The amount of the participation decided by our board of directors must make the project at least financially neutral for Réseau Ferré de France, given the risks related to the project.
All projects must include a related public subsidy portion. In particular, this concerns the specific renewal subsidies awarded to Réseau Ferré de France by the State since 2004, with a view to bringing the network up to standard. This must enable the company to finance a total amount of €1.9 billion in work until 2010 without any additional debt.
The use of innovative financing, such as Private-Public Partnership contracts and public service delegations for rail investment projects, is another modernisation aspect of our strategy.
Cutting costs
Our financial balance relies on controlling our supply and service purchasing policies and on using a railway cost monitoring system. In addition, the expenses related to maintenance and upkeep should drop due to the following two factors:
Revamping of installations in line with investment efforts,
introduction of appropriate operating and maintenance systems for some facilities by their users.
Cost control also means increased productivity: the last management agreement signed in 2007-2010 includes commitments in this field that touch on both operations and maintenance.
Finally, operating expenses should undergo a similar process.
Each network sub-assembly should aim for its own economic balance according to the following functionalities:
inter-urban and long-distance,
peri-urban,
local access.
Depending on the specific management equation, each system should best balance costs and revenues.
Financial vigilance
We have assumed an inherited debt of €29 billion, which requires the company to be very vigilant in financial terms.
Optimising our financial trajectory is a major issue that relies on subsidies to help us get out of debt, cash-flow generation and active long-term debt management.
To make sure we get out of debt, we are striving to organise these major financial balances around two main points :
balanced investments in the area of development, with respect for article 4,
improved operating income in order to reduce the debt not covered under article 4.
Réseau Ferré de France’s Performance Contract with the State
Our ambition is to formulate these network performance objectives in simple terms and to be transparent, with the State and with our fellow citizens, about how we can achieve them.
Our final aim is to reach an equilibrium, through an increase in our sales revenues, through the use of our property resources and by controlling our network management costs.
These undertakings are part of our performance contract with the State, which leads us to a renewed model for governing the railway system. This contract enables us to define an economic model and to stabilise our corporate trajectory.
Our final aim is to reach an equilibrium, through an increase in our sales revenues, through the use of our property resources and by controlling our network management costs.
These undertakings are part of our performance contract with the State, which leads us to a renewed model for governing the railway system. This contract enables us to define an economic model and to stabilise our corporate trajectory.
