RFI HIGH SPEED RAIL PALERMO-CATANIA

Promoter – Financial Intermediary

RETE FERROVIARIA ITALIANA SPA

Location

• Italy

Description

The project consists of the upgrade of 178 km of the Palermo-Catania railway line (between Fiumetorto and Bicocca), which is part of the Scandinavian-Mediterranean TEN-T Corridor. The project connects the northern and eastern coastal urban areas of Sicily with internal parts of the region. The final objective is the construction of an electrified double track railway with an increase in design speed and capacity. The EIB financing will be provided both through direct lending to the Italian State and Linked Risk Sharing operations with acceptable financial institutions, aiming at counter-guaranteeing advance payment and performance bonds that financial institutions will provide to the procurement authority (Rete Ferroviaria Italiana) in reference to contractors' obligations for the project construction contracts.

Additionality and Impact

The project consists of the upgrade of 178 km of the Palermo-Catania rail line, which is part of the Scandinavian-Mediterranean TEN-T Corridor, connecting the northern and eastern coastal urban areas of Sicily, with higher population density, with internal parts of the region.

The Project, located in Sicily (a less developed region), is expected to reduce journey times and consequently strengthen socio-economic dynamism as well as contributing to the improved accessibility of both urban areas as well as areas of the region far from the coast.

The shift of passenger and freight traffic to rail addresses market failures by minimising a number of transport externalities, such as the harm to humans in terms of accidents and loss of life, or environmental externalities such as noise, pollution and CO2 emissions.

The project is expected to be 100% eligible under Climate Action and Environmental Sustainability.

The EIB financing is an innovative combination of a funding instrument (Investment Loan) to the State with a guarantee product (Linked Risk Sharing) to financial intermediaries issuing project guarantees (performance and advance payment bonds) and taking risk on private counterparties (project contractors), for the benefit of the timely construction of a large-scale infrastructure project in line with EU key priorities. As such, the EIB financing is an absolute novelty on the market. The project therefore addresses market failures by supporting financial intermediaries in providing guarantees to the project promoter, covering the contractors' performance risk in respect of the construction works.

Objectives

The project is expected to increase the quality of rail services in Sicily, a less-developed region in southern Italy, as well as promote travel by rail, enhance sustainable transport and contribute to reduction of greenhouse gas (GHG) emissions and therefore to climate change mitigation in line with EU objectives. The project is therefore eligible under Article 309 point (a) "projects for developing less-developed regions" and point (c) "projects of common interest" of the Treaty on the functioning of the European Union. The project will also contribute to meeting the Bank's climate action target.

Comments

Total Project Costs include EIB estimation of interests on the EIB loan during the construction period as well as technical and financial contingencies.

Sector(s)

• Transport - Transportation and storage

Proposed EIB finance (Approximate amount)

EUR 2100 million

Total cost (Approximate amount)

EUR 7630 million

Environmental aspects

The design was developed in six different functional lots. Each of the six project lots fell within the scope of Annex I of the Environmental Impact Assessment (EIA) Directive (2011/92/EU as amended by 2014/52/EU). The competent authority issued environmental decisions for all six project lots. The environmental decisions identify appropriate mitigation measures for environmental impacts during construction and operations. The residual negative impacts during construction and operations of the project, considering the planned mitigation measures, are acceptable. Following an assessment of impacts on Natura 2000 sites close to each lot of the project alignment, it was concluded that the project is not likely to have significant effects on the identified sites. The project will significantly improve the rail connection between Palermo and Catania and is expected to result in modal shift from road and to rail with the corresponding environmental benefits in terms of reduction of noise, GHG emissions and pollution. The project is expected to contribute to climate action and environmental sustainability (CA&ES) objectives, in particular to climate mitigation and pollution prevention and control.

Procurement

The Promoter is subject to the EU procurement rules for the utilities sector, in particular Directive 2014/25/EU, which requires, for contracts over certain thresholds, a prior call for competition and publication in the EU Official Journal (OJEU) of the contract and award notices. The project is implemented through a number of contracts covering the implementation of the six lots. Each lot has/will have a main design and build contract (civil works, electrification and signalling). ERTMS will be implemented under a separate contract covering the whole section from Fiumetorto to Bicocca. For contracts over the relevant thresholds, OJEU notices have been/will be issued.

Status

Signed - 16/12/2022