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Rail News: High-Speed Rail

Amtrak hires KPMG team to develop NEC business, financial plan


Today, Amtrak announced it has awarded a contract to a KPMG-led team to help the railroad develop the business and financial plan for a next-generation, 220 mph high-speed rail service in the Northeast Corridor (NEC).

The team — which also includes Steer Davies Gleave, DWH Strategic Advisors, Sharon Greene & Associates and TranSystems Corp. — will help Amtrak determine how it can maximize private investment opportunities. The business and financial plan will determine how much of the project costs can be covered with private financing and how much will need to be paid for with public funds, and outline a strategy for delving into the private investment and capital markets.

During a press conference held earlier today, Amtrak Vice President of High-Speed Rail Al Engel was hesitant to estimate how much private capital might be available for the project.

“What I’ve seen in terms of other corridors globally and with some of the California study work that’s been done, you would expect about a 40 to 50 percent public component,” he said. “But each corridor is unique and has unique characteristics in terms of ridership, so I’m not going to guess what the percentage will be, but it will be significant.”

The business and financial plan will be developed in conjunction with Amtrak officials and also will address a variety of project financing issues, such as risk, credit, debt and investment phasing.

The plan is expected to be complete by mid-2012.

Amtrak’s quest to integrate private financing for the NEC high-speed rail project is not in response to calls from House Republicans that Amtrak privatize its operations.

“The whole point of this study is to identify exactly what businesses are within the next-generation high-speed rail corridor that would be suitable for private investment, such as real estate development and station areas,” said Engel. “Amtrak will be the operator of the system and the master developer.”

Amtrak plans to build out its next-generation NEC by phasing in 220 mph service on four operating segments: Philadelphia-New York (which could have 220 mph trains by 2023), Philadelphia-Washington, D.C., New York-Hartford, Conn., and Hartford-Boston.

As Amtrak and the KPMG team identify private investment opportunities, they also will build on an updated analysis of ridership, revenue, operations and maintenance costs, and capital investment that’s being completed as Amtrak seeks to refine its initial NEC vision, which was issued in September 2010.

“The U.S. high-speed rail landscape has changed significantly during the past year, and the updated Amtrak high-speed rail report will incorporate those changes with the new analysis and more,” Amtrak officials said in a press release.

The updated report is expected to be issued in early fall

Angela Cotey