Deregularisation of Public Transport in Sweden

Known all over the world for its effective public transport and a very efficient Swedish Transport Administration (STA), Sweden is on its way to deregularise public transport. This is a decision that has caught transport experts and analysts by surprise and has initiated debates on social networking sites because Sweden has always been known for its reliable and well organised public transport links to the remotest areas. And its bus timetables are very well coordinated with bus and train arrival and departure time.

The bringing in of commercial companies to offer public transport services takes its origin in a new law passed by Swedish Parliament in June 2010 after an open consultation. The new law liberalises the industry by removing formal barriers to entry in road and rail based modes of transport. The new national law on public transport will come into force on January 1, 2012.

Pär-Erik Westin who was instrumental in preparing the new law and is now Economic Advisor and Long Term Planner with the Swedish Transport Administration (STA), informed TrafficInfraTech, “The new law allows commercial initiatives on the markets for local and regional public transport; domains that were previously limited to local public transport authorities. However, with commercial freedom follow certain general obligations for those who enter the market in order to safeguard the interests of the end-users.” He added that the new law also seeks to delimit the responsibilities of local public transport authorities. “National responsibilities in the area of public transport are also addressed in the new law and a supervision scheme is introduced.”

Reasons

But then, the issue that sparked many a debate on professional networking sites, was a little unexpected. Why would one of the best public transport management authorities in the world invite private players into the fold, was a question asked by many. Moreover, why was a new law needed in the first place by the Swedish government? The triggers, as TrafficInfraTech learnt, were many. It was felt that public transport should increasingly be an alternative to the use of private cars and that a shift was needed from cost effectiveness and supply side to customer orientation and demand side of the industry. Moreover, the 30-year-old current legislation was deemed to be less relevant and a need was felt to meet the new EU-Regulation on public transport that requires transparency in financing and contractual arrangements. An EU-Regulation on public transport (Regulation 1370/2007) entered into force on December 2009 and the new national law complements it. “One of the general ideas behind the new law is to strengthen public transport in the planning procedures for housing and infrastructure. Another ambition has been to modernise a national law that stems from the 1970s,” said Westin.

The STA will be affected by the new law that has been prepared by the Swedish Government Cabinet. A political initiative, it was decided upon by the national parliament. The move now opens public transport services to competition in an effort to stimulate the private market. Under the new guidelines it has been decided that apart from welcoming the private players, the local or regional passenger services – whether they are provided by Public Transport Authority (PTA) or by commercial players, will not be hindered. Emphasis has been laid on safeguarding the interest of the passengers through framing of general rules and creating a centralised monitoring system. A regulatory body has been introduced which does not exist in the current system as no monitoring or regulating of market performance was needed so far. It has also been decreed that public intervention shall be regulated in functional terms rather than geographical which basically means PTA area of competence is limited to daily commuting services.

Background: A little background of the build-up to the present services will be helpful here. In the rail sector, night-train and charter services were started in 2007 while 2009 saw the opening up of international services and all domestic services on weekends and holidays. A policy of no restrictions was adopted in 2010 and analysis of a Trainplan (2012) is pending. New entrants and expansion of the existing regional commuter system form a part of the overall scenario.

Likewise, in the road sector, from 1999 it was decided that the incumbent rail operator, known as SJ, could no longer prevent long-distance bus coach services. The same way, from 2012, the PTAs will not be able to prevent public passenger services of any kind.

Procedure: The PTA will be required to provide a long-term programme for the provision of passenger services in its county. Name/address of PTA, type of contract it has applied for and the services it will cover will be published in the Official Journal (OJ) of the European Union at least one year before the launch of tender. Then the public service contract will be awarded and the names of selected service operators and the compensation decided upon will be published. There will be open entry for commercial initiatives at all times but they will be subject to general rules.

Of course, things are not all that hunky-dory as they may seem. The PTAs are already skeptical of “cherry-picking” by commercial operators and of fragmentation of coordinated services. Commercial service operators, on the other hand, fear that the commercial initiatives will be overrun by PTAs and their subsidies.

This is why the government is keen to offer fair and transparent conditions and environment so that both public and private sectors can exist in the public transport arena without much bad blood. It may not be of much significance but it is felt that while the government meets the EU Regulation and overhauls an ‘outdated’ law, this is a move to off-load patronage risk or save money.