Germany: Huge infrastructure modernisation project continues after signing of new Agreement
7 April 2015 • Author(s): Frank Sennhenn, CEO of DB Netz AG
Success of financing rail infrastructure in Germany is now in its second round. The second Performance and Financing Agreement (Leistungs- und Finanzierungsvereinbarung, ‘LuFV II’) between the government of the Federal Republic of Germany and Deutsche Bahn AG (DB AG) was signed at the beginning of January 2015. The conclusion of this agreement is good news for both the rail industry and Germany as a business location in total. For European Railway Review, Frank Sennhenn – CEO of DB Netz AG – explains that the new agreement provides planning and financial security for the existing tracks, stations and DB AG’s power systems for a further five years. At the same time, the conclusion of the LuFV II is the basis of the largest ever modernisation programme for Deutsche Bahn’s infrastructure.
Between 2015 and 2019, both the German Federal Government and DB AG will be making more investments than ever before. Altogether, approximately €28 billion will be invested in the German rail infrastructure over the next five years. This is around €8 billion more than in the comparable period of the first Performance and Financing Agreement (Leistungs- und Finanzierungsvereinbarung, ‘LuFV I’).
The LuFV II thus forms the basis for the long-term reduction of the existing investment backlog in Europe’s largest rail network; 875 bridges alone are due to be replaced by 2019. Further funds will be invested in other aspects such as the maintenance and modernisation of many tunnels, signal boxes, platforms and points.
The significance and role of the Performance and Financing Agreement for the German rail infrastructure becomes clear just by glancing at the past efforts. Until 2008, the German Federal Government financed measures for the existing rail network on a yearly basis, using an input-oriented and time-consuming process based on extensive lists of (individual) infrastructure measures. This caused great bureaucratic efforts and not only resulted in an extremely slow implementation of projects for the existing network, but also meant that the assessment of the effectiveness of the funding was limited…