Contracts and competition
Reduced transport subsidies are just one possible impact of the new regulation, the main purpose of which is to increase accountability and transparency in public transport services. Under the regulation, if public transport service is handled by one or more independent service providers, all terms of service must be spelled out in written contracts that specify obligations, regions covered by the service, parameters of compensation by the local authority to the operator, and duration of the agreement.
Such contracts would have to be awarded through public tendering — all the better to encourage competition. Although cities with single, so-called 'in-house' providers will at first be allowed to award their contracts to existing vendors without a tender, they will have to make public all the terms of the agreement. After a period of time, competing vendors who have had an opportunity to inspect the contracts will be allowed to bid for the work.
The regulation was intended to encourage greater efficiency and competition, according to Peter Faross of the European Commission's Directorate General for Energy and Transport. At the time the regulation was first proposed, in 2000, public transport operators in Europe, on the whole, were actually overcompensated for their services, Faross said. Transport companies would fight fiercely for service agreements, and when they lost they would inevitably sue and demand that the city show the basis on which the winner got the contract.
Faross believes greater transparency and stricter tendering regulations should help alleviate this problem, while also fostering better public transport service. He noted that the regulation allows municipal authorities to put quality criteria into contracts and to stipulate penalties and rewards based on how well an operator meets these standards.
However, the representative of one municipality has doubts about whether the regulation will work. Stanislaw Jedlinski represents Warsaw's Public Transport Authority, which works with a single, independent operator of the type that will be allowed to keep its exclusive working contract under the new regulation. Jedlinski believes this arrangement will hinder improvements to local public transport.
"The European Commission says the essence of the new regulation is that the relationships between authorities and operators are governed by contract, but this has been the case in Poland for years," Jedlinski said. "Rather, it seems a step back. You many have a contract with an in-house operator, but if he's the only one supplying service, he's not really exposed to the market."
Although common in Poland, contracting is still new to countries like Croatia. Zagreb, City Hall and its transport operator, Zagrebacki Elektricni Tramvaj (ZET), signed a formal operating agreement for the first time ever just last year, joining the ranks of Pula and Dubrovnik as cities where public transport is regulated by contract.
In point of fact, the contract hasn't changed much in Zagreb, according to Branimir Valasek, an advisor at ZET. Even before ZET and Zagreb City Hall sealed their relationship in writing, the city had provided adequate support for public transport, he said. However, a worry came prior to recent elections, when political opponents of the incumbent administration accused City Hall of spending too much on public transport. The sitting city council won the election, but the close race was enough to convince Valasek of the merits of a long-term contract — one that provides some shelter against the vicissitudes of politics.
