Portugal’s government has changed its mind within the space of two days, saying today that plans to build a network of high-speed passenger rail lines has been cancelled and will not be revived, with some of the European Union subsidies for the project to be switched into freight transport.
In a surprise development, the Government had said on Tuesday it had managed to secure funding for a high-speed rail link between Lisbon and Madrid, despite categorically stating last spring the project had been definitively shelved.
After Portugal’s austerity-based decision to cease any additional work on the high-speed link between the two Iberian capitals, the European Union withdrew funding due the country’s ‘default’ on the project.
However, the Finance Ministry explained on Tuesday it had brokered renewed financing for the project via the European Commission’s Connecting Europe Facility (CEF) funding.
“The Portuguese Government has managed to safeguard EU funding for the Lisbon-Madrid project, while simultaneously managing to significantly increase the percentage of EU funding, thereby reducing the financial strain on the budget of the Portuguese state”, the Finance Ministry said in a statement sent to television channel TVI.
According to the Ministry, funding for the project had been increased to 40 percent of the total, as opposed to the 25 percent granted under the previous and now nullified agreement.
After the Finance Ministry's statement, the Economy Ministry lent further credence to this 'news' when it made a minor correction to the Finance Ministry's initial report saying it did not foresee any work to start before 2015, which is when the current government’s mandate ends.
But this was followed by the secretary of state for transport correcting the economy and finance ministries, saying the passenger-rail plan was gone for good.
“The TGV died in November of 2011, the, Sérgio Monteiro, said at a news conference in Lisbon, referring to the date of the cabinet meeting where the decision was taken.
“This cancellation is irreversible.”
The stress now, he said, is all on investing in rail freight, not passenger transport.
“The government’s objective is to link the southern ports – Setúbal, Sines and Lisbon – to the rest of Europe,” he said, adding that this was to be done through the LTM, or Cargo Transport Line.
Once built, this will reduce costs to exporters by 40 percent and increase transport companies’ capacity by 80 percent.
As for the cost of the project, Monteiro noted that the TGV project would have cost €4.276 billion, whereas the cargo line is to cost €700 million “in the worst scenario”.
Of that amount, just €175 million would come from national coffers, thanks to European Union subsidies.
The largest opposition party, the Socialists, have been strong supporters of the high-speed rail project, and it was under the government of José Sócrates that it was drawn up, which means the project would have been supported even if the current government were to fail in its bid to be re-elected two years from now.
Under Sócrates, the link was touted as crucial to overcoming Portugal’s peripheral status within the European Union.
The previous Socialist government, even after the onset of the financial crisis, in 2009 presented plans to have Faro, Lisbon and Oporto linked with each other and with Europe, while Oporto would be linked to Spain through Vigo, while Faro would have been connected to Huelva.