Advancing UPT Reform in ECA Region
Mission to St. Petersburg
17-21st May 2004
This report has been prepared by CIE Consult within the framework of the project “Advancing Urban Passenger Transport Reform in the ECA Region”. The project is funded by the Irish Government Trust Fund and is co-ordinated by the World Bank.
Readers are requested to note the following :
a)This report draws from a series of meetings undertaken in St. Petersburg between 17th and 21st May 2004 by Mr. Brendan FINN and Mr. Richard SMITH for CIE Consult. The authors fully accept the limitations of both such a short timeframe and limited opportunity to verify data in forming an accurate picture of the situation in St. Petersburg. Nonetheless, we are reasonably confident that this report will contain useful information for anyone interested in the City of St. Petersburg.
b)This report was developed as a somewhat-informal working note, to capture and quickly disseminate information within a related group of World Bank co-ordinated projects, and at a time when the situation was very rapidly developing and changing in the City of St. Petersburg. It was not intended to have the rigorous approach of a Bank aide memoire.
c)Most of the report contains objective material and assessment. Anything which is subjective, uncertain or speculation by the authors is shown in italics.
The authors acknowledge the excellent and helpful assistance of the officials of the various organisations listed on the final page of this report.
Advancing UPT Reform in ECA Region
Mission to St. Petersburg
17-21st May 2004
St. Petersburg
The City of St. Petersburg is a Subject of the Russian Federation in its own right. Leningrad Oblast is another Subject. In legal terms they are considered as being on an equal basis, although obviously they have very different characteristics and transportation requirements.
This point is relevant since :
a)most cities of the Russian Federation are subject of the Oblast in which they are located, and hence their transport legislation and budget are not independent of the Oblast
b)The metropolitan area of St. Petersburg extends into Leningrad Oblast, and indeed some of the newest and fastest growing population centres are within Leningrad Oblast. Thus, UPT strategies and practices for the City of St. Petersburg cannot ignore Leningrad Oblast
c)Technically, all services between Leningrad Oblast and the City of St. Petersburg are inter-regional, and hence subject to Federal rather than Oblast regulation. In theory, every such service should be registered with the Ministry of Transport of the Russian Federation. In practice this does not happen.
The population of the City of St. Petersburg is approximately 4.6 million (a small decline in recent years). Thus, after the megacities of London, Moscow and Paris, it is the largest of the next rank of European cities.
The transportation needs and strategies must be appropriate to a city of such significance. This has issues of structure, long-term strategic planning, investment, network design and integration, orderly functioning of the market, linkage to the economic development, mobility of citizens, and instrument of societal goals.
In the immediate term, St. Petersburg is faced with five significant challenges :
1)The financial conditions and availability of funds to support the public sector transportation
2)The continued division of services into ‘social’ and ‘commercial’ types which extracts business and revenue from the public sector while burdening them with the unremunerative travel, while citizens with privileges do not have access to the mobility services of the commercial sector
3)The need to consolidate the many independent route-taxis into a coherent set of services appropriate to a large city, and to bring them within the formal offer
4)The need to develop coherent, equitable and competitive mechanisms for the market for UPT in St. Petersburg.
5)The need to establish priority and excellent operating environment for the surface transport services.
The solutions to these challenges will need to take into account the interfaces with the Leningrad Oblast, both at the boundary points and for services between the population centres and St. Petersburg.
St. Petersburg Passenger Transport
Urban Passenger Transport in St. Petersburg consists of the following :
- Metro
- Tram (Gorelectrotrans)
- Trolleybus (Gorelectrotrans)
- State-sector bus services (Passagiravtotrans)
- Private sector route taxi and express bus services
- Railways
The market share based on 2002 data is as follows :
Mode / Million trips / % of market shareUnderground / 880 / 33,5
Tram / 420 / 16,0
Trolley bus / 340 / 13,0
The bus / 580 / 22,1
Express buses and rout taxi / 370 / 14,1
Railway (in the city) / 35 / 1,3
Total / 2625 / 100
Organisation of the UPT in St. Petersburg
Bus Operators in St. Petersburg
At present, the bus transport market is split between the public and private sector.
Passagiravtotrans is the large and still dominant public sector operator which operates mostly big buses on social routes, but also has a fleet of small buses which has about 20% of the commercial route market. It has a fleet of about 1120 large buses.
The private sector operates mostly small buses on the commercial routes. The commercial routes are mostly the route taxis (marshrutni) which are fixed route services operated with Gazelles or equivalent (12-14 seater). Some private operators have started to utilise big buses (e.g. Baltic Star) and a few operate social routes. However, the private sector currently operates less than 5% of the social routes.
The private operators can be categorised as :
Large: 3 operators have fleets in excess of 800 vehicles
Medium : 8-10 operators have fleets of 100-200 vehicles
Small : about 50 operators have 10-50 vehicles
While the large and medium operators have become quite well organised and have started to develop as proper companies, it appears that the smaller operators are somewhat wild and not well developed.
The Transport Committee advises that about 200 large buses have already joined the commercial fleet. The city is currently buying 280 new buses. However, PAT has 300 buses that are fully depreciated. Even though they are unlikely to scrap them all immediately, the new buses are really fleet replacement with a temporary – but rapidly dissipating- increase in capacity.
Route Network and Transport Services
The Metro, tram and trolleybus networks provide the core of the passenger transport network in St. Petersburg. The bus services are mostly complementary to the rail and electric transport. There are some bus services in the central area, but they mostly provide services in the suburban areas, as feeders to/from the Metro, and providing links either from the centre to the suburbs or between suburbs that are not adequately covered by the electric transport modes.
The route network has two distinct components :
Big bus routes : These are mostly social routes, operated by Passagiravtotrans. In the last few years, some private operators have begun commercial big bus operations, most notably Baltic Star who have access to Scania buses. Tariffs for social routes is currently 7 Rb. For commercial routes it can vary. The Baltic Star route on Nevsky Prospect is 12 Rb.
Marshrutki : These are all commercial routes, registered with the city. They operate as fixed route with designated start/end points. Tariffs are fixed for the specific route. Some routes link the city centre to suburban areas, others links suburban areas, and others provide transverse routes crossing the city. They gained a strong foothold in the market due to the deteriorating conditions on the public sector services and fill any potentially profitable gap. Passengers have a seat, and even if it is a little cramped, it can be far superior to standing on overcrowded buses or trams. Marshrutki also offer direct services for many passengers who are otherwise faced with one or more transfers. Tariffs are typically 12-15 Rb. in central and inner areas, although some services are priced lower than that (e.g. on Vasilevsky Island where they have replaced the tram) and in suburban areas where they can be close to social tariffs.
Marshrutki have developed mostly on the proposals of operators, although some appear to have been on the request of the people. There is a lot of duplication of routes, both among the marshrutki and overlaying bus or electric transport routes. It would appear that some of the marshrutki are genuine additions to the network, and others are merely extractive.
There has not been a formal network redesign in years, and the marshrutki have developed without any proper planning.
Operators need a licence to run a route, which they need to get from the Transport Committee. Whatever about the earlier development of these routes, they are currently offered to tender. The key tender basis appears to be the proposed tariff. The start/finish points, the route taken, and the number of vehicles are specified in the contract.
The licences are awarded for periods of 1-3 years. Normally there is just one operator per route, but there can be more than one. It seems that many of the routes are overlapping, so in effect there can be multiple operators on the same general route or corridor.
Profitability on the marshrutni is believed to be high, estimated by the City to be 166%.
The new tender system in St. Petersburg
A radically new system will be implemented with effect from 1st January 2005. All of the bus services will be tendered out.
About 60 “area lots” will be developed. These will rationalise the current range of bus services. Where possible, each area lot will be centred on a Metro station, a key tram stop, or other natural hub. The big bus and marshrutni will be redesigned to consolidate the services where there is overlap. The ratio of big to small buses will change. It seems that about a third of the small bus operation will be converted to medium or large bus services (about 1300 small buses to 500 large/medium buses).
This design work is being carried out by the Institute, based on data they have on residences (origins) and work locations (destinations) and of course taking into account the existing network as an approximation of demand. It was not possible to go through a set of area lots to understand the new networks or the supporting information and analysis processes, but the principle criteria seems to be replacement and rationalisation of existing network links rather than more fundamental review of transport needs.
At present, the large number of exempts can only use the social routes, whose quality has been deteriorating. Unless they pay, they do not have access to the increasing number of commercial routes. The idea is that the exempts would have access to all of the routes in the area lot, and hence the network can be redesigned as a single network rather than having two sets of competing routes.
The area lots will all be put to tender in autumn 2004. In addition, there will be a set of smaller lots which each consist of a single route. These are long routes which cut across many areas, or routes in locations which cannot be done as an area. These are expected to account for about 5-15% of the total supply. Also, there will be some tenders for routes which run partly in Leningrad Oblast, and which are (technically) inter-regional routes.
The winner of each tender will operate the entire area lot. Existing operators will be displaced. The winner can subcontract some of the service. It is expected that this will be done for the small bus operations, thus allowing some of the smaller operators to stay in business, but in a different role.
Contracts will be of either 5 years or 1 year duration. Where operators have their own buses and bring new investment, then they will be awarded 5 year contracts. Where operators are renting buses or don’t own them – which is the case of Passagiravtotrans – the contract is only for one year and it will be put up for tender again in 2005. It is not clear if this is a mechanism designed to control PAT.
The contracts will be a form of net cost contract, where the operator carries the revenue risk.
Currently, routes are designated as “social” and “commercial”. In the new system, there also appears to be category of routes, but it was not clear how they are designated. One set of routes will be at the controlled ‘universal’ tariff set by the city for all such services. The other set of routes will be at tariffs proposed by the operator. Apparently, the aim is that exempt passengers will be entitled to use all of the services.
Again, since we did not have the opportunity to go through any areas in detail, it is not clear whether the new route designation follows the current social/commercial split, whether it follows the new big/small bus split, or whether most routes will be universal tariff with just some special routes at the higher tariff.
Whatever approach is taken, there are some uncertainties for the revenue forecasting, especially given the apparent lack of data and available passenger forecasts :
a)What will be the impact of restructuring the network – will it alter travel patterns and impact on the patronage and revenues
b)If more routes are available at universal tariff rate (which will presumably be closer to the current social route fares than to commercial fares), surely this will result in revenue loss since people currently travelling by commercial services will switch to lower tariff routes
c)Currently, some people entitled to free travel must be paying to use commercial routes when they need to. They will now travel for free, hence there will be revenue loss
d)We are led to believe that the quality of the social routes has deteriorated, with poor frequencies on some routes. When they have free access to all routes, some people will probably travel more often, putting pressure on busier services, and possibly worsening the travel conditions of people who are currently paying commercial fares for better quality – what impact will this have ?
e)Bidders do not have the full information set for any area - even those who are significant operators there – since the PAT operates the social routes and a mix of operators operates the commercial routes. It is most unlikely that they will share information and the city itself seems to have only very partial or general information, so bidders take a significant risk in forecasting revenue
It is not clear that either the Economic Development Committee or the Transport Committee has made a detailed estimate of the financials (unlikely, since they are still doing the design work). In the absence of robust revenue or cost forecasts, then no-one can really forecast the likely value of the bids, and hence the public funding required.
This is a heavy risk to carry forward. Possible scenarios are :
a)Bidders expect to have to have no flexibility afterwards, so they price in the risk on a conservative basis. Any such winning bid will be relatively expensive for the city, but should be financially sound
b)Bidders do not understand the risks, and make optimistic bids in good faith. Such winning bids will be vulnerable, and could undermine the operator during 2005-6.
c)Bidders deliberately price low, expecting to renegotiate in early-2005, when they feel the City will have to be “reasonable” – who wants service to collapse in February ? – especially if the major operators covertly agree on this strategy. Nonetheless, the bidders are serious and the only issue is the price
d)Bidders behave recklessly and do what it takes to win the bid, determined to win the contracts and sort out the consequences later. This subverts the process and leads to instability.
The City cannot currently know how much they should budget for bus services for 2005. One approach could be to forecast the same amount as for 2004, on the assumption that the revenue dilution impacts would be offset by the pricing gains and the cross-subsidisation. Even if the sum of the bids is less than the budget, the budget is retained as contingency for adjustments as the winning bidders understand the fiscal reality of their area lots.
Objectives of the new system
From the various discussions, the objectives of the new system can be summarised as :
- To bring a rational approach to the network
- To gain control of the total bus network
- To increase the amount of service done with big buses
- To reduce the amount of small bus operation, and associated congestion
- To harness the profitability of the marshrutni
- To cross-subsidise the unprofitable big bus (existing social) services
- To make more services available to the exempt passengers
- To weed out the small operators
- To push the development of the medium and large operators, thus preparing the ground for a better organised sector and for future competition in the sector
- To attract new investment
- To reduce subsidy
- To improve quality, standards, and professionalism in the sector
It is clear that the City are very eager to gain access to the large profits they believe are being made on the commercial routes. They expect to achieve this both by forcing the operators to run and thus cross-subsidise the social routes in their areas, and for the PAT to have access to the profits in the areas that it wins. An amount of 270 million Rb. of such transfers has been mentioned.