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Appendix M Sweden Case Study
M1. ferry legislation and licensing
Domestic Ferry Services
M1.1 There are three types of ferries in Sweden:
- Services to Gotland which is approximately a 3 hour journey from the main land;
- Smaller road ferries that operate across rivers, fjords etc.; and
- Fast boats operating along the coast.
M1.2 The small road ferries are operated by Vegvesnet (Public Road Department) and are owned by the Government. The fast boats are operated and owned by the counties.
M1.3 Farjerederiet operates all the car ferries on the main road network. This is an organisation within Public Road Department and is owned by the government. They operate 99.9% of the ferry services in Sweden.
M1.4 The Swedish company, Rederi
AB Gotland, which runs the service to Gotland, is listed on the stock market.
Carrying Statistics
M1.5 The number of passengers travelling on car ferries was 8,138,000 in 2002 (total 1,105 million passengers by all modes of public transport) compared to 8,202,000 (total 1,050 million trips) in 1990 (Svenska Local Trafiken-Foreningen).
Regulator
M1.6 Rikstrafiken (National Public Transport Agency) co-ordinates long-distance travel in Sweden. It was established as an agency in 1999 following a government decision on a new transport policy. It is subordinate to the Ministry of Industry, Employment and Communications and has two main tasks:
- To foster and coordinate public transport throughout Sweden; and
- To procure interregional public transport by rail, air, sea and land, which would not be commercially viable.
M1.7 For the service to Gotland, it is the Rikstrafiken which sets out the minimum number of services the operator needs to provide. The contract stipulates that there needs to be a service 5 days a week throughout the year to Gotland.
M1.8 The Sjofartsverket is responsible for vessel safety. The Swedish Maritime Administration (
SMA) is a public enterprise within the transport sector.
SMA works to keep the sea lanes open and safe. The services include:
- pilotage and fairways
- ice-breaking
- hydrographics
- maritime search and rescue
- maritime safety inspection
M2. Lifeline Services
M2.1 The only Lifeline Service is the service to Gotland. There is one harbour at Gotland and two on the main land.
M2.2 The two lines, Visby (Gotland) - Nynashamn and Visby (Gotland) - Oskarshamn are under a Public Service Obligation Contract (
PSC).
History of Government Intervention
M2.3 The lifeline service was put in operation after the 1960's when previously commercial operations became unviable.
M2.4 Since 1971, the service between the mainland and Gotland has been regulated through a procurement procedure. The government signed an agreement with a shipping company on passenger and goods traffic. The objective was to guarantee the people of Gotland and Gotland's business sector a good standard of transport service all year around to mitigate some of the competitive disadvantages arising from their location.
M2.5 On 1
st July 2000, Rikstrafiken took over as the regulatory authority and with the responsibility for procurement.
Definition of Lifeline Services
M2.6 The Gotland service is classified as a lifeline service because the service is not viable on a commercial basis but there is a social need to keep the service running all year around. It is defined by the Swedish Government.
M2.7 The objective of the lifeline service is to ensure an adequate level of service in the winter despite there not being sufficient demand.
Operator
M2.8 The current operator, Rederi
AB Gotland, is registered in Sweden and operates the route between Gotland and the mainland. They carry passengers, vehicles and freight. A separate vessel is used if there is any particular dangerous material.
M2.9 Until 1987, Rederi
AB Gotland held the concession but then the concession was awarded to another shipping company for the period 1988 to 1997. Since 1998, Rederi
AB Gotland, through Destination Gotland, has regained responsibility for the Gotland service.
Minimum Requirement
M2.10 The only service criterion is that there needs to be a service at least five days a week (for vehicles and freight).
M2.11 Residents on Gotland have a reduction in ticket price.
M2.12 The ticket price, which is currently set in the contract, cannot increase more than the consumer index (approx 2-3% per year has been the average) and the price of oil.
M2.13 The Government sets the minimum criteria and monitors that they are met. If the operator fails to comply with the contract the contract can be cancelled. To date, there has been no incident of this happening.
Carrying Statistics
M2.14 In 2004, 1.4 million passengers travelled on the ferry.
M3. Lifeline Services: Financial or Commercial Support
M3.1 The Swedish Government is supporting the ferry company to carry out the Gotland services through subsidies.
M3.2 The Gotland
PSC is a gross-cost contract. The remuneration is a guaranteed top up to meet losses determined on the gap between the operating costs and the revenue. This year the financial support is
SEK 240 million due to renewal of the vessels (one which can take 800 passengers and two which can take 1500 passengers).
M3.3 The budget is determined on a year-by-year basis, which can be adjusted for rising oil prices, harbour fees, and in this instance extra for purchase of new vessels. There was a significant jump in subsidy this year, and due to the promise not to increase the price of tickets, the government has been unable to claim back the money.
M3.4 A minimum requirement of 5-days-a-week services (in essence a
PSO) is a form of protection against competition. The minimum requirement discourages operators from entering the market only to skim the services in the summer. There are currently no other operators on the route.
M4. Lifeline Services: Contract
M4.1 A contract between the company and the Government means the company undertakes to operate services to and from Gotland with a precisely regulated requirement with respect to safety, environmental impact, convenience, time-tabling and price.
M4.2 The timetable and the ticket price are set by the Government.
M4.3 The state receives the income from traffic operations, and then disburses the agreed remuneration to Destination Gotland for the service provided. This includes an incentive based on volume of traffic carried.
M4.4 The private operator provides services based on a contract for the Government as a result of a tendering competition. There were several operators in the competition for the current contract. Rederi
AB had the best offer both in terms of quality they offered and price, and subsequently won the contract.
M4.5 The operator has a minor responsibility and bears minimal risks as the contract guarantees to cover any losses. The company has the cost of vessels and staff whilst the Government covers the rest.
M4.6 This has turned out to be quite an expensive contract for the Government. The new contractual arrangements will be set out differently in the next period.
M5. The Tendering Process
M5.1 The current contract is for 10 years, with the possibility to extend for an extra year. The current contract commenced on 1
st January 1998 and is due to end 31
st December 2008.
M5.2 It was an open tender, but the terms of the contract do not entirely comply with
EU rules. No discussion with the
EC took place when the last contract was drafted and awarded.
M5.3 The successful bidder (current operator) was not the incumbent operator on the route. There were several operators competing for the contract. The former operator stopped their services and is no longer providing ferry services for passengers.
M6.
EU Maritime Cabotage Routes
M6.1 The next tender process will be in compliance with
EU maritime cabotage rules as much as possible. It will also be of a shorter nature, hopefully 5 years (similar to the contract for Denmark for Bornholm).
M6.2 The new tender will go out in Autumn 2005, and it will be as open as possible, including advertisement throughout the European Union.
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