Pricing regimes and financing of land passenger transport infrastucture and services in Portugal.

Economic regulation refers to policies by which the State, or some institution on its behalf, decides on which firms participate in the market and defines, for the services (or products) provided, the respective prices, quantities to be supplied and qualitative features. Building on the resultsof the research carried out in the REVENUE project (DG TREN 5th FrameworkProgramme), this paper presents the core elements of the regulatory framework for the provision of land passenger transport infrastructure and services in Portugal. Focussing on urban public transport and private road passenger transport, this paper discusses pricing principles and instruments,financing practices and subsidisation mechanisms and forms of cooperationbetween the public and private sector that are currently being applied. In the case of private passenger transport, particular attention is paid tothe dynamics of the contractual relationship between the State and the concessionary of the two Tagus bridges (Lusoponte). More precisely, the seven changes in the concession contract (between 1995 and 2001), which had animpact in the level of public budget contribution, the duration of the contract and the definition of tariffs are addressed. In the case of urban public transport, an analysis is made of the legal instruments that can be used by the State for the purpose of financial assistance to the public transport system. Six instruments are discussed, namely, public service compensations, subsidies for financial re-equilibrium, capital increases, transfer of liabilities to the State, guarantees and capital stock financing. The paper concludes by pointing out possible short term future policy developments in the regulatory framework. For the covering abstract see ITRD E135582.