EIB gives agreement in principle to funding for Dublin Metro

Scofflaw

The European Investment Bank (EIB) has agreed in principle to make a contribution of up to €500 million to the Dublin Metro project. The planned Metro would provide a 19 km link from Dublin city centre, via Dublin airport, to Fingal and is seen by the Bank as a key infrastructure project for Ireland.

Speaking in Dublin today, the Vice-president of the European Investment Bank, Mr Plutarchos Sakellaris, also said that the Bank is currently examining two other public-private partnership projects in Ireland which would form part of a second western transport corridor between Cork, Limerick and Galway.

These are the N17-N18 Gort to Tuam motorway link and the N11-N7 Motorway. These are two projects highlighted in the EUR 2 billion Irish National Roads Authority second roads PPP programme. At the moment, the Bank is still completing the technical and feasibility appraisals of these projects. If conditions are met, agreements could be signed in the next year.

In 2009 the EIB made EUR 260 million available to Irish SMEs through credit lines with Allied Irish, Bank of Ireland and Ulster Bank. Mr Sakellaris confirmed that two-thirds of this had already been disbursed to Irish SMEs. He described this as a satisfactory level of uptake and confirmed that further funding for Irish SMEs would be considered.

The funding to Irish banks for SMEs across the country was specifically for new investments and not working capital and is designed to ensure that investment in small business continues, even in a difficult economic situation, he said.

Recent EIB energy funding has reinforced renewable energy, energy efficiency and security of supply projects. This included EUR 300m for the EIRGRID East-West Interconnector and EUR 200m for wind farms under ESB’s Renewables Programme. EUR 300m was provided to Dublin Airport for the new terminal.

The EIB Delegation met with Finance Minister Brian Lenihan, Governor of the Central Bank of Ireland, Patrick Honohan, Transport Minister Noel Dempsey, the Financial Services Regulatory authority and other officials and business leaders to see how the EIB can best support Ireland and ensure continued investment in key infrastructure during challenging times.

Wasn't sure whether this should go in the Europe forum, but since it's a decent contribution to a major Irish infrastructural project (over which doubts have been hovering in current conditions) I've put it in here.

Government to discuss cuts in capital spending
21 March 2010 By Pat Leahy, Political Editor

The government is to discuss significant cuts to its programme of capital spending - including the future of the planned Metro North project - when it considers a Department of Finance report on the capital investment programme shortly.

Political sources said that the finance report might be considered as early as this week. It is understood to contain criticisms of the system of public private partnerships (PPPs) to fund capital investment, and recommends that better value can be achieved for a variety of big spending projects. It is likely that the use of PPPs in future will be greatly restricted.

The future of one large PPP, however, remains unclear. The Metro North project, linking Dublin City Centre with Swords via Dublin Airport, has yet to receive the final go ahead from government. Political sources said that the future of the project, which has a price tag estimated at €5 billion, is likely to be the subject of division at cabinet level.

Department of Finance officials are thought to be opposed to the project, although it is not clear if finance minister Brian Lenihan will heed their advice. Green Party ministers are strongly in favour of Metro North, and Eamon Ryan, the Minister for Communications, Energy and Natural Resources, has frequently spoken in favour of the project.

Ciaran Cuffe, the Green TD in Dun Laoghaire, said that the Metro was a ‘‘must-have’’ project for the party.

However, another party source speculated that the project could be at least postponed until the public finances showed some improvement.

cordially,
Scofflaw

dan_d

I can only imagine the uproar if it doesn't go ahead.

Nody

I used to live in Swords; 1h (if lucky) of a bumpy bus ride to the city centre or ~25 EUR with a taxi. Yes, I can see a lot of unhappy taxi drivers if that one comes through and a lot of happy ex bus riders but I'm not holding my breath for the 12 Bil (yes yes I know it says 5 Bil but this is a government project) project to be completed before 2025 (2019 was the date the local MPs was talking about iirc).

zootroid

dan_d wrote: »

I can only imagine the uproar if it doesn't go ahead.

+1

Banks are bailed out no questions asked. But the government shows its indecisiveness when it comes to a major infrastructural project that would be of benefit to the entire city.

ei.sdraob

Nody wrote: »

I used to live in Swords; 1h (if lucky) of a bumpy bus ride to the city centre or ~25 EUR with a taxi. Yes, I can see a lot of unhappy taxi drivers if that one comes through and a lot of happy ex bus riders but I'm not holding my breath for the 12 Bil (yes yes I know it says 5 Bil but this is a government project) project to be completed before 2025 (2019 was the date the local MPs was talking about iirc).

while more infrastructure is important

i think you hit nail on head (this is sparta ireland), if this is anything like terminal 2 project, it will end up costing north of 35 billion

how much did LUAS overrun by?

BobbyD10

ei.sdraob wrote: »

while more infrastructure is important

i think you hit nail on head (this is sparta ireland), if this is anything like terminal 2 project, it will end up costing north of 35 billion

how much did LUAS overrun by?

Not accurate but according to this article it was just over a modest 1/2 billion.

http://www.independent.ie/national-news/new-pressure-for-review-of-huge-surge-in-cost-of-luas-180927.html

fkt

Would be brilliant but does Dublin really need it?

Living in Drumcondra I'm guessing if I wanted to get it to town I would be on the metro coming from Ballymun. Whats the bets it becomes an epicenter of anti-social behaviour akin to the red-line Luas....

Idbatterim

what does this €5 billion include? It is a stagerring sum of money!

silverharp

for 5bn, could you not roll out 4 or 5 Luas lines? the metro will carry 80,000 per day, as all the money will be borrowed the interest on 5billion at 5% (guess) is €250 million pa. so you are talking 80K capital cost per person or €3K per passanger in interest per annum before you even consider running costs

Seems expensive, am I out by a large factor on anything?

AlekSmart

Whats the bets it becomes an epicenter of anti-social behaviour akin to the red-line Luas....

Rojomcdojo,even money I should think.....the only thing worth wagering on is just how long it will take for the antisocialists to make it their own :eek:

View

I am surprised no one had condemned the EIB/EU for interfering with our sovereign right to make a pig's ear out of our economy/infrastructure.

Down with this sort of thing!

Scofflaw

Wasn't some amount of the €5bn covering construction inflation and the outrageous price of land acquisition...?

cordially,
Scofflaw

greendom

fkt wrote: »

Would be brilliant but does Dublin really need it?

If it wants to be a capital city with a proper transport infrastructure, the answer has to be yes.

Sleepy

It's probably not an 'optimal' solution for Dublin's transport needs but it would certainly be an improvement to the current situation.

Wonder who'll get the contract? Presumably if the EIB are funding it, they'll insist on best practices for tendering and the job will end up going to a spanish/portugese firm?

Flamed Diving

Silverharp2 wrote: »

for 5bn, could you not roll out 4 or 5 Luas lines? the metro will carry 80,000 per day, as all the money will be borrowed the interest on 5billion at 5% (guess) is €250 million pa. so you are talking 80K capital cost per person or €3K per passanger in interest per annum before you even consider running costs

Seems expensive, am I out by a large factor on anything?

Is 5% a typical rate for such loans?

Flamed Diving

fkt wrote: »

Would be brilliant but does Dublin really need it?

We are the only European capital with no rail/metro link from the airport to the city. Just a bumpy bus. I reckon this one line is required, whether under or above ground.

Scofflaw

Silverharp2 wrote: »

for 5bn, could you not roll out 4 or 5 Luas lines? the metro will carry 80,000 per day, as all the money will be borrowed the interest on 5billion at 5% (guess) is €250 million pa. so you are talking 80K capital cost per person or €3K per passanger in interest per annum before you even consider running costs

Seems expensive, am I out by a large factor on anything?

The line is expected to carry 34 million passengers per year (source) - for comparison the Luas carried 28m in 2007 - which would give you about €7.35 in interest per passenger per year, and about €147 in capital costs. If you consider that the lifespan of the Metro is nominally 30 years, that seems to me to be more like a capital cost of €4.90 per passenger journey.

However, as I said, I'm not sure how much of the €5bn related to the purchase of land and the very high construction costs when those estimates were made. More recent estimates (see here) have apparently come down to closer to €2bn, which would change the picture rather a lot.

cordially,
Scofflaw

silverharp

Flamed Diving wrote: »

Is 5% a typical rate for such loans?

Unless it will be a stand alone commercial bond of some sort, it will just be added to the national debt? I dont know if Ireland has tried to raise 30 year debt recently but doubt they could for less then 5%
Either way 5bn divided bewteen 80 thousand customers wouldnt appear to be a setup for a commercial proposition.

silverharp

Scofflaw wrote: »

The line is expected to carry 34 million passengers per year (source) - for comparison the Luas carried 28m in 2007 - which would give you about €7.35 in interest per passenger per year

you might need to check your sums , that would be per trip not per year. 34m / 365 is 93K people every day, so less then 100K would have to carry the project or every ticket would have to €7 just to cover the interest

edit - on re-reading you might have been saying the same thing as me, but it still means that a ticket would need to be up at the €15 to breakeven, which beats a taxi but not for daily commuters

dynamick

Silverharp2 wrote: »

for 5bn, could you not roll out 4 or 5 Luas lines? the metro will carry 80,000 per day, as all the money will be borrowed the interest on 5billion at 5% (guess) is €250 million pa. so you are talking 80K capital cost per person or €3K per passanger in interest per annum before you even consider running costs

Seems expensive, am I out by a large factor on anything?

The €5 billion figure was made up to sell newspapers. It was derived as follows: estimate for metro construction cost leaked from RPA: 2.5bn, add 30 years interest payments @5% = 2.5 + 2.3 = 4.8 billion. Round up to 5.

Labour and materials and land costs have all plummeted since the boom so all the estimates are likely to be over the mark. The design has not been finalised so there are no bids yet. So we don't know exactly how much it's going to cost.

Say the bid comes in at 2 billion. That's €120m/year repayment for 30 years @5%. Assuming we get to the predicted 34m annual passengers, that's €3.50 subsidy per ticket. Luas is running at about €2/ticket.

Bear in mind that Dublin Bus increased their bus fleet by a third from 2000-2009 and managed to lose passengers during that time. So more buses are not the answer and neither are luas lines that have to share road space with cars and buses and wait at traffic lights.

Building 18km of underground and elevated track with stations would be a massive stimulus project.

Scofflaw

Silverharp2 wrote: »

you might need to check your sums , that would be per trip not per year. 34m / 365 is 93K people every day, so less then 100K would have to carry the project or every ticket would have to €7 just to cover the interest

edit - on re-reading you might have been saying the same thing as me, but it still means that a ticket would need to be up at the €15 to breakeven, which beats a taxi but not for daily commuters

I think the difference between our figures is that I'm calculating per passenger journey. However, I suspect the vital issue is that the €5bn seems to be a "newspaper figure", and one from the height of the boom, at that. Obviously a cost of €2bn, with the EIB putting in €0.5bn of that, would change the figures considerably - as per dynamick's post - with interest initially at €75m/year, and dropping as the capital is paid off.

cordially,
Scofflaw

dynamick

The EIB money is a loan not a grant. They finance a max of 50% of capital costs and typically 25-33%. The money may be provided to a PPP consortium rather than to the state directly. It is a coup all the same to get this funding.

murphaph

May I just remind everyone that all these figures assume the metro suddenly switches off in 30 years. It is (as Scofflaw said) just a nominal lifespan. In reality a modern metro built today will require very little major work for a century and it will still be in use in all likelihood in 2 centuries, if other metros around the world are anything to go by (and they were all built using techniques that have since been massively advanced upon).

The metro will also be just part of a network, which if developed properly would attract more and more passengers out of cars. It cannot be viewed as a single line, but the first step in an integrated network.

If Dublin does not get the infrastructure it needs to attract the right companies to set up here, it will stagnate and believe me...the rest of Ireland will sink if Dublin sinks.

ei.sdraob

murphaph wrote: »

May I just remind everyone that all these figures assume the metro suddenly switches off in 30 years. It is (as Scofflaw said) just a nominal lifespan. In reality a modern metro built today will require very little major work for a century and it will still be in use in all likelihood in 2 centuries, if other metros around the world are anything to go by (and they were all built using techniques that have since been massively advanced upon).

The metro will also be just part of a network, which if developed properly would attract more and more passengers out of cars. It cannot be viewed as a single line, but the first step in an integrated network.

If Dublin does not get the infrastructure it needs to attract the right companies to set up here, it will stagnate and believe me...the rest of Ireland will sink if Dublin sinks.

good post

even tho I don't currently live in Dublin, i still would rather see money being spend on better infrastructure

than handed over to zombie banks or god forbid "distressed" mortgage holders

Chris_5339762

This and Dart Interconnector must be built. There will be a major shift to public transport then. I reckon the two will be more successful that even the wildest predictions, once people see how useful they can be.

murphaph

Chris_5339762 wrote: »

This and Dart Interconnector must be built. There will be a major shift to public transport then. I reckon the two will be more successful that even the wildest predictions, once people see how useful they can be.

They will be, perticularly if they are both built as they will interconnect at 2 points, Drumcondra and St Stephen's Green, could and should be 3 (Donabate) with a little imagination. If however, only one project goes ahed, it should be DART Underground as it delivers much more bang for buck by allowing the maximum use of the existing network and can be delivered in stages (apart from the tunnel aspect to the project). Dublin could and should be a highly attractive place to live and work. It should pull the best talent from all over the world to work their. If a city is unattractive (poor transport, traffic etc.) it will not attract the best people. Dublin should look carefully at Munich tbh.