Wednesday, July 11, 2012

Cash-strapped France may halt high-speed train expansion


Air France KLM SA
20:50:54 IDT
Alstom SA
20:50:57 IDT
A commuter walks on a TGV train platform at Nantes's railway station in this September 7, 2010 file photo. REUTERS/Stephane Mahe/Files
PARIS | Wed Jul 11, 2012 6:34pm IST
(Reuters) - France may abandon plans for a major extension of its high-speed train network, one of the most visible if costly symbols of its engineering prowess, as the new left-wing government strives to shrink its huge debt.
Budget Minister Jerome Cahuzac broke the news in a public TV interview on Wednesday, saying it seemed extravagant to spend so much in hard times on 14 new TGV train lines former president Nicolas Sarkozy promised before he lost power in May.
"It's fair to ask whether we should extend this or that TGV line for marginal time gains," Cahuzac, seizing on criticism of the train investments by state auditors, told France 2 television.
The minister, who has to find a way to deliver on Socialist President Francois Hollande's pledge to balance France's books, said it would be better to focus investment on maintaining the less glamorous secondary train network many people depend on.
Hollande has vowed to spare French people wage and pension cuts of the kind being imposed in countries such as Greece and Ireland in return for international financial bailouts, saying such austerity risks turning economic stagnation into recession.
Apart from raising tax, he is looking for other ways to keep a lid on public expenditure in Europe's second-biggest economy, with the aim of getting rid of France's public deficit by 2017 in line with European commitments.
According to a report by the national audit office, public investment in transport, including 14 TGV lines earmarked for building by 2020, would top 150 billion euros for the central government and local authorities in France.
Getting France's deficit down to 3 percent of gross domestic product next year means the government needs to find additional revenue or spending cuts worth upwards of 33 billion euros.
Cecile Duflot, a minister in charge of urban planning, said in June, just weeks after the left-wing government was formed, that it was time to review the extent of plans to expand Paris's borders to transform the capital into a bigger urban entity, the "Grand Paris", along the lines of London or New York or Tokyo.
One potential beneficiary of any cutbacks of the high-speed train network is Air France (AIRF.PA), which faces increasingly intense competition from the Alstom-built (ALSO.PA) TGV trains. Faced with mounting losses on short-haul operations like other carriers, Air France-KLM announced plans last month to shed 5,000 jobs and cut costs. (Additional reporting by Thierry Leveque)


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