LG CNS wins contract
for the KRW 205.4 billion Athens e-Ticketing Project
|■ LG CNS will build a traffic card system for all means of public transportation in Athens over two years and operate the system for ten years.
■ Won the contract after a three-year competition with American and French companies, thus proving the top IT competencies of Korea.
■ Successfully entered Europe after entering Colombia and New Zealand. Good prospects for winning a transportation project contract in London.
LG CNS has become the first in Korea to carry out a traffic card project in Europe, following projects in Colombia and New Zealand.
LG CNS (www.lgcns.com, CEO Kim Dae-hoon) formed a consortium with Greece-based Terna Energy (www.terna-energy.com) and won a EUR 137.9 million (around KRW 205.4 billion) contract for the Athens e-Ticketing Project. This project involves building and operating the Automatic Fare Collection System (AFC) for all means of public transportation in Athens. The project budget for IT, which LG CNS will take charge of, is more than KRW 100 billion.
An announcement on a qualification examination for the Athens e-Ticketing Project was made in 2011. Order placement was then delayed for two years due to the economic crisis in Greece and other reasons. The project resumed in April 2013. Only three out of the six companies that passed the qualification examination took part in the final bidding, which indicates that there were many twists and turns up to the point of selection of a project implementer. In December 2013, Greek President Karolos Papoulias visited Korea and had a summit meeting with Korean President Park Geun-hye, during which this project was discussed. Relevant government departments and industrial officials from the two countries took great interest in the project.
The winning of the contract by LG CNS is extremely significant in that it means that Korea’s information technology has overcome the high technology entry barrier of Europe. LG CNS became a leader in information technology in transportation through projects for a traffic card system in Seoul, Korea in 2004, in Wellington, New Zealand in 2008, and Bogota, Colombia in 2011.
The order for the Athens e-Ticketing Project was made by the Athens Urban Public Transport Organization (OASA) under the Ministry of Infrastructure, Transport and Networks of Greece. This project will run for 12 years. For the first two years, traffic card terminals, gates, and automatic ticket-issuing machines will be installed for all means of public transportation in Athens, including buses, trolley buses, subways, national railways, and trams, which are essentially subways that run on roads. A center system will be built for settlement of fares. After construction is complete, LG CNS will operate the traffic card infrastructure and center system for ten years.
Once construction is complete, the traffic cards will be issued to the citizens of Athens, instead of the paper tickets that they currently use, to receive new benefits, such as discounts on transit. Athens will adopt a fare system where the fare is proportional to riding time, unlike the fare system in Seoul, where the fare is proportional to travel distance.
The chosen project implementer, the LG CNS-Terna Energy Consortium, will establish a Special Purpose Company (SPC) that will be in charge of traffic card issuance and settlement, and will carry out the project for the next 12 years. The project will be financed by the European Union fund, Terna Energy, equity investment by LG CNS, and project financing by Korea Eximbank.
This project will establish a strong beachhead for foreign investment by Korean financial institutions, such as the Korea Eximbank, and it should make Greece a more attractive destination for foreign capital. The project structure is based on a virtuous cycle in that it promotes the interests of the companies that won the contract as well as the involved officials in both countries. The earnings gained by the SPC by operating traffic cards will be distributed to investors in the form of dividends. For this reason, LG CNS will be able to gain an equity yield in addition to sales.
LG CNS will effectively leverage its winning of the contract to further advance into Europe. It plans to diversify business areas to include its in-house developed solutions, such as the Smart Green City and Smart Factory, and actively enter other countries in Europe.
Regarding the company’s winning of the contract for the Athens e-Ticketing Project, LG CNS CEO Kim Dae-hoon emphasized, “LG CNS will apply all of its internal solutions and technologies that were proven in Korea and abroad to ensure the success of the project. The company will continue to take the lead in Korean IT’s advancement into Europe.”
LG CNS is also taking part in a proposal for a smart public transportation fare payment system that will be built in London, UK. The project is worth KRW 1.6 trillion, and selection of the project implementer is expected at the end of this year. The company plans to continue expanding into the European transportation market.
1. Athens e-Ticketing Project
The order for the project was placed by the Athens Urban Public Transport Organization (OASA) under the Ministry of Infrastructure, Transport and Networks of Greece. The official name of the project is Design, Financing, Installation, Operations Support, Maintenance, and Technical Management of an Integrated Automatic Fare Collection System for the Companies of the OASA Group with PPP.
The results of a qualification examination were announced in July 2011, indicating that six consortiums were chosen. Order placement was delayed for two years due to the economic crisis in Greece, and an official notice on bidding was finally made in April 2013. Three consortiums, including the LG CNS Consortium, took part in the bidding in July 2013. A final decision was made on the LG CNS Consortium in March 2014.
There are various means of mass transportation in Athens, including buses, three subway lines, the national railroad system, trams, which were created in celebration of the 2004 Olympics, and trolley buses.
Greece is conducting four major transportation infrastructure projects to improve public transportation in Athens, a major international tourist destination. The four projects are the Athens e-Ticketing Project, for which LG CNS won a contract, the provision of light rail transit vehicles in Thessaloniki, the construction of Subway Line No. 4 in Athens and the supply of subway trains, and the light rail transit project in Athens and Glyfada.
The SPC that will be established for execution of the Athens e-Ticketing Project will install an automatic fare-collection system on 1,839 general buses, 366 trolley buses, 90 subway stations, 48 tram stations, and 35 tram vehicles. It will also build a central system for collection and settlement of transportation fares.
2. Exports of Seoul Special City’s new traffic card system
Wellington, the capital of New Zealand, has been running 400 buses using Seoul Special City’s traffic card terminal system since 2008. System construction was completed for 700 buses in Oakland in 2011. Settlement work for traffic card transaction data that is generated in New Zealand is handled by the T-money Settlement Center located in Incheon.
LG CNS won a contract in 2011 for a traffic card system project in Bogota, Colombia, a major country in Latin America, and successfully completed the project. The traffic card system in Bogota is increasingly being bench marked by other Latin American countries, and LG CNS expects to enter neighboring countries.
One especially noteworthy project that LG CNS anticipates to win is the Smart Public Transportation Fare Payment System project, which is worth KRW 1.6 trillion. Transport for London placed the order for the project last year. LG CNS passed the suitability examination for the project and is now waiting for the project implementer selection, which is scheduled for the end of the year. LG CNS is competing with companies from the US and Germany.
3. Introduction to ‘Terna Energy’ (www.terna-energy.com)
Terna Energy, which is a Greek partner of LG CNS, is one of 16 subsidiaries of the GEK TERNA Group. The group began as a construction company in 1972, and Terna Energy was founded in 1997.
Terna Energy is an SOC construction company. It has distinguished itself in the construction of new & renewable energy power plants, including wind power, photovoltaic, and biomass plants.
Written by the publicity department of LG CNS