Evaluation and future of road toll concessions€¦ · Evaluation and future of road toll concessions / Final Report // 3. ... a private firm,the Concessionaire is ... Evaluation

Evaluation and future of road toll concessions

Presented byPricewaterhouseCoopers Advisory S.p.A. to ASECAP

2014

Table of Contents

1 Introduction 5 1.1 Aim of the Study 5 1.2 Sources of information 5 1.3 Structure of the Study 5

2 Description of the typical toll concession scheme 7 2.1 What is a road toll concession 7

3 Description of the ASECAP network 10 3.1 Presentation of ASECAP 10 3.2 Concession models applied to networks operated by ASECAP members 11 3.3 Value added of the road toll concession 22 3.4 Conclusions 38

4 Issues and Risks 40 4.1 Risk allocation between Concession Authority and Concessionaire 40 4.2 Unforeseeneventsaffectingriskallocation 45 4.3 Aspectsaffectingsocialacceptabilityoftollsystems 49 4.4 Casesofevolutions/divergencesintheinterpretationofthecontracts 50 4.5 Conclusions 52

5 Forms of funding 54 5.1 Alternativeformsofroadtolling 54 5.2 OverviewofthefinancialinstrumentstosupporttransportinfrastructureinEurope 59 5.3 Conclusions 62

6 TheEuropeanlegislativeframeworkaffectingtheconcessionsector 64 6.1 EUlegislativeinitiativesinthetransportsector 64 6.2 Stateaidlegislation 69 6.3 Conclusions 70

7 Conclusions and recommendations 71 7.1 Advantagesofroadtollconcessionscheme 71 7.2 Recommendations 72

Annexes 73AnnexI.Applicationofthedirective1999/62/ECintheASECAPmembers’network 73Annex II List of sources 75

Evaluation and future of road toll concessions / Final Report // 3

Key figures*

“ The Concession Model represents the most flexible tool to finance, build and manage road infrastructure ”

26 billion Toll revenues

187Companies

48.265,01Km in operation

27.346ETC lanes

26.660.884ETC subscribers

*Source: ASECAP 2014 Statistical Bulletin

Evaluation and future of road toll concessions / Final Report 4 //

1. Introduction

1.1 Aim of the Study

In a fragmented context characterized by a largenumberofEUinitiativesthatmightaffectthetolledroad concession schemes, the aim of the study is:

• to clarify what a road concession is, •shedmorelightonissuesconcerningconces-

sions as well as bottlenecks for the develop-ment of road infrastructures,

•highlightthebenefitsoftheconcessionsche-mesandtheconditionsforensuringtheirpro-per implementation across Europe.

1.2 Sources of information

TheStudyisbasedondataandinformationgathe-red through desk research and a performancesurvey.

Thedeskresearchinparticularanalyzedandcom-pared several sources to allow a full and coherent overview of toll concession schemes in Europe. These sources are:

• Reports and publications from ASECAP and from its members,

• Data and statistics elaborated by relevant ins-titutions (for a full list of sources see Annex 3),

• Further input from interventions, feedbacks and discussions on specific matters whichtookplaceduringtheAthensASECAPStudyDays (26-28 May 2014).

In addition to the desk research, in March 2014, a Performance survey was addressed to all ASECAP

memberstogatherallno-publiclyavailableinforma-tionrelatedtotollsystemsandconcessionregimes.More in detail, the Performance survey aimed at obtaining an overview and an exhaustive unders-tandingofthetopicsregardingtollroadconcessioncontractsand it gatheredopinions,bestpracticesand recommendations on future development of concession schemes in European countries.

1.3 Structure of the Study

ThisHandbookconsistsofthefollowingchapters:• Chapter 2 provides a description of the typical concessionmodeldefiningitsmainfeaturesandprovidingadefinitionbothatEuropeanlevelandat ASECAP member level.• Chapter 3 providesageneral overviewof theconcession models applied to networks ope-rated by ASECAPmembers (i.e. national legalframework, the obligations of the Concessio-naireandthefinancialaspectsrelatedtotollingmechanisms). This section also provides data andinformationwithregardtotheperformanceof the motorway network in concession (i.e. length of network built, toll equipment, trafficvolumes and safety) and considerations about the socio economic relevance of toll concession schemesatlocalandregionallevel.• Chapter 4isaimedatprovidingaclearunders-tanding of the issues and risks endangering acorrect application of the road concession tool through the assessment of possible impactsspecificsituationsmighthaveontheconcessionschemes.


1. Introduction

• Chapter 5isaimedatdepictingthealternativeforms of funding (i.e. direct tolling, indirecttollingandshadowtolling)andatintroducingthe existing financial instruments to supporttransport infrastructure in Europe.

• Chapter 6 is aimed at providing the legisla-tive framework at European level with direct or indirect impacts on road toll concession models. In particular, this section describes thelegislationinforcewithregardtothepast,recent and upcoming EU legislative initia-tives relevant for the development of the road toll sector.

• Chapter 7 isaimedatprovidingconcreteele-ments and recommendations to support the concession model as the most flexible toolfor constructing,maintaining and operating anetworkforagivenperiod.

• Annex I provides an overview of the implemen-tationoftheEurovignettesysteminASECAPmembers’network.

• Annex II provides the questionnaire formatlaunched in the context of the Performance Survey 2014.

• Annex III provides the list of relevant sources investigatedinthecontextofthedeskanalysis.


2 Description of the typical toll concession scheme

Nowadays governments are constantly lookingfor ways to develop their road networks and other transport links tomeet citizenseconomic,politicaland social needs. New motorways are expensive and governments are often unable or unwilling tocommit fiscal spending on roads. The scarcity ofpublic resourceshasbrought to theapplicationofnewmodels for thefinancingandmanagementoftolled roads, ranging from thecollectionof tolls tothe recourse toprivate financeviamore “sophisti-cated”concessionmodels.EachmodelenvisagesadifferentlinkbetweentheState-whichistheownerof the road network - and the Company - which has to carry out the roadmanagement and operationactivities.

At the European level, nowadays such link can have differentprofiles:

• Road toll concession scheme;•DirectcontrolbytheState(byspecificAgen-

cies as well);• Public-Private Companies.

2.1 What is a road toll concession

In general, a concession is a kind of public–pri-vate partnership (PPP) under which a public au-thority (Concession Authority) grants specific longtermrightstoaprivateorsemi-publicorganisation(Concessionaire), to construct, overhaul, maintain and operate an infrastructure. On the basis of the agreementbetweenagovernmentoritsentitiesandaprivate firm, theConcessionaire iscommitted touse all utility assets conferred and has the responsi-bility for all operations and investments, while asset ownership remains with the authority and the assets revert to the authority at the end of the concession period.

In the context of a concession agreement, theConcessionaire typically obtains its revenues direc-

tly from the consumer in the form of a toll and/or from the public authority in the form of payments calculated on the basis of the traffic observed onthe motorway.

Three mechanisms for obtaining revenues areavailable:

1. Direct road tolling: the public authority dele-gates the construction, funding and mana-gement of a road to a managing company,which carries out the work at its expenses. The company collects tolls from the users (dis-tance-basedcharge)toreimbursetheinvest-ment and to cover maintenance costs (see alsoparagraph5.1.1).

2. Indirect road tolling: the public authority dele-gatestheconstruction,fundingandmanage-mentofaroadtoamanagingcompany,whichcarries out the work at its expenses. Users pay a toll to the public authority, usually on the basisofa“vignette”(time-basedcharge).Theoperator is remunerated by the public autho-rity, typically on the basis of availability pay-ments(seealsoparagraph5.1.2).

3. Shadow toll system: the public authority dele-gatestheconstruction,fundingandmanage-mentofaroadtoamanagingcompany.Thecompany collects no toll from the users, for whom the infrastructure is free (see also para-graph5.1.3).Thecompanyisdirectlyremune-ratedbythepublicawardingauthority.

From the perspective of the Concessionaire, the operatingcashflowofatypicalconcessioncontractshows losses in the initial phase, typically from the beginningoftheconcessioncontracttillthefirstyearsof operations, due the capital expenditures (CAPEX) andoperatingexpenses(OPEX)intheconstructionphaseand to thestart-upphaseof the tollingac-



tivity. However, few years after the entry into ope-rationoftheinfrastructure,theoperatingcashflowtypicallyshows increasingrevenuesduetoconso-lidatedtrafficanddecreasingexpenditures,usuallylimited to road ordinary and extraordinary mainte-nance.Figure1providesanillustrationhighlighting(1)thecosts,bothCAPEX(e.g.constructionmate-rials,acquisitionofland,etc.),andOPEX(e.g.labourcost,managementandsurveillancecosts,etc.),ini-tially incurred to construct the infrastructure; (2) the costs, bothCAPEX andOPEX, incurring after theentry into operation of the infrastructure, due to the extraordinary and ordinary maintenance and mana-gementoftheinfrastructure;(3)therevenuesand(4)theoperatingcashflow.

Two aspects are particularly relevant when dea-lingwithaconcessionscheme: thescope of the contract and the risk allocation between Conces-sion Authority and Concessionaire.

As anticipated, a concession contract includes not only the construction but also the maintenance and operation of an infrastructure. Thus, a concession contract involves both responsibility for a construc-tionprogrammeandalong-termservice.

Furthermore, a concession contract implies a trans-fer of responsibility (risks) from the Concession Au-thority to the Concessionaire that is usually clearly identified by the national road administrations asbeing an essential component of a concessioncontract. Ingeneral, thereare fourcategoriesofriskforaconcessioncontract:(i)politicalandlegalrisks, (ii) technical risks, (iii) commercial risks and (iv)economicandfinancialrisks.Intheory,theriskallocation follows the principle that not all risks are equalandthereforetheymustnotbebornebythesame entity but should be carried out by the entity inpossessionofadequatestructuraltoolsforredu-cing thecostsassociatedwithbearingsuch risk.Therefore,anadequatebalancingofriskallocationisessential from thebeginningof theconcessionperiod in order to avoid subsequent reviews ofthe contractual clauses with related negotiationsand costs. Risks are shared not only between the Concession Authorities and Concessionaires, but alsowith thepublicworkscontractors,operatingcompanies and insurers (see chapter 4).

2.1.1 Definition of road toll concession at European level

At European level, in the context of the public pro-curement and concessions policy, several direc-tives1 provided over time different definitions ofconcession. The Directive 2014/23/EC currently in forceprovidesthedefinitionsof “concession” as reported in points (a) and (b):

a. “works concession” means a contract for pe-cuniaryinterestconcludedinwritingbymeansofwhichoneormorecontractingauthoritiesorcontractingentitiesentrusttheexecutionofworks to one or more economic operators the consideration for which consists either solely in the right to exploit theworks that are thesubjectofthecontractorinthatrighttogetherwith payment;

b. “services concession” means a contract forpecuniaryinterestconcludedinwritingbymeansofwhichoneormorecontractingau-thoritiesorcontractingentitiesentrustthepro-

Figure 1 – Operating cash flow of a typical concession contract

Source: PwC elaboration

1 In particular Directive 71/305//CEE and the Directive 2004/18/CE

Reve

nues

/Los

ses

Entry intooperation of theinfrastructure

Concession period

Operation phase

Construction phase

Extraordinary maintenance



CAPEX OPEX Revenues Cash Flow



visionandthemanagementofservicesotherthan the execution of works referred to in point (a) to one or more economic operators, the consideration of which consists either solely intherighttoexploittheservicesthatarethesubjectofthecontractorinthatrighttogetherwith payment.

Incaseofroadmotorways,thedefinitionofconces-sion schemes could be related to works concession and/orservicesconcession(seeparagraph2.1.2).

2.1.2 Definition of road toll concession in ASECAP member European Countries

Thereisnotauniquemodelofroadtollconcession,and,asaconsequence,notauniquedefinition.Asexample,thetablebelowreportsthedifferentdefi-nitions provided by ASECAP members.

Thedifferentdefinitionsofroadtollconcessioncanbereferredbothtothedefinitionofworkconcessionand service concession contained in the Directive 2014/23/EC.

Table 1 – Definition of road toll concession in the European countries*

Country Definition

Austria InAustria,the“concession”(legalstatus:ususfructuscontract,Fruchtgenussvertrag)betweentheRepublicofAustriaandASFINAGisdefinedbyacontractbetweenthesetwoentitiesandbyfurtherspecificlaws:ASFINAGisentitledtocollecttollontheentireAustrianMotorwaynetwork(levelofthetollratesbeingapprovedbytheState).Inreturnforthetollcollected,ASFINAGisobligedtofinance,build,maintainandoperatetheAustrianhighwayandmotorwaynetwork.

France A concession is a tool for State authorities to fund, maintain, exploit and develop an infrastructure network.Throughtheconcession,theStatedelegatetothecontractingpartnertheresponsibilitytobuildandoperatetheinfrastructurebearingtherisksassociated.Remunerationofthepartnerisprovidedthroughtollcollection.

Greece In Greece a concession is a tool for State authorities to complete and maintain the motorway networkthroughthetollscollected.

Hungary InHungary, a concession is a tool developedbyprivate investors, financed through availabilitypayment received directly from the State, to build, maintain, improve and operate the infrastructure.

Italy “Publicworksconcessions”arecontracts,withfinancialclauses,writtenandregistered,regardingthe solely execution,or thedetailedconstructiondesignand theconsequent execution,or thefinaldesignandthedetailedconstructiondesignandtheexecutionofpublicworks,andofworksstructurallyanddirectlyconnectedtothem;andtheirfunctionalandfinancialoperation.

Poland A concession is a type of contract between the State and the private entrepreneur, whereby the Concessionaireagreestocarryoutthesubjectoftheconcessionforremuneration,whichistherighttousethesubjectoftheconcessionwiththerighttocollectthebenefits(tolls).

Slovenia AconcessionisabilaterallegalrelationshipbetweenthestateandpublicentityasthegrantorandanylegalentityastheConcessionaire,inwhichtheawardingauthoritygrantstotheConcessionaireaspecialorexclusiverighttoperformpublicserviceorotheractivityinthepublicinterest,whichmay include the construction of facilities and devices that are partly or wholly in the public interest.

Spain A concession is a mixed contract of public works and public service operations.Through the concession, theConcessionaire, chosenbymeansof a public tender, operates apublicservice,suchasplacinganinfrastructurefortravelandroadtransportationatthedisposalofindividuals, and on the other, the Concessionaire occupies and uses an asset of public domain for the operation of that service.

*ThetablereportsdefinitionsfromASECAPmemberswhichprovideditinthecontextofthePerformanceSurvey2014.


M E R M É D I T E R R A N É E

M E R

T Y R R H É N I E N N E

M E R

É G É E

M E R

N O I R E

MA N C H E

M E R

D U N O R D M E RB A

L T I QU

E

M E RB L A

N

CH

E

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D E B A R E N T SO C É A N G L A C I A L

A R C T I Q U E

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NA

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ME R

A D R I A T I Q U E

Ljubljana

Bratislava

Beograd

Moscou

London

Praha

Lisboa

Warszawa

Amsterdam

Oslo

Rabat

Roma

Dublin

Budapes t

Athinai

Paris

Madrid

Copenhague

Zagreb

Wien

Berlin

Danemark

Royaume-Uni

Irlande

Allemagne

Pays-Bas

France

Italie

Espagne

Grèce

Portugal

Pologne

RépubliqueTchèque

Hongrie

Norvège

Serbie

Croatie

Slovaquie

Slovénie

Autriche

Maroc

Russie

ASECAP Full MemberASECAP Associate MemberASECAP Network as for 01.01.2013 ASECAP Network in constructionToll Bridges,Tunnels and Roads

3 Description of the ASECAP network

3.1 Presentation of ASECAP

ASECAP is the European Association of Opera-torsofTollRoad Infrastructures,whosemembers’networks in 2014 span over 48,000 km of mo-torways,bridgesand tunnelsacross21countries,managedby187companies.

ASECAP’s purpose is to advocate and developthe system of motorways and road infrastructures inEuropeapplying tollsasameans toensure thefinancing of their construction, maintenance andoperation.

The members of the Association are either full members or associate members:

• 16 full members: ASFINAG (Austria), HUKA (Croatia), SUND & BÆLT Holding A/S (Den-mark), ASFA (France), HELLASTRON (Gree-ce), AKA (Hungary), ITIA (Ireland), AISCAT(Italy), NORVEGFINANS (Norway), N.V. Wes-terscheldetunnel (The Netherlands), AWSA (Poland),APCAP(Portugal),PublicEnterprise«Roads of Serbia» (Serbia), DARS (Slovenia), SEOPAN(Spain),MacquarieMotorwayGroup(UnitedKingdom);

• 5 associate members: Kapsch T.S. (CzechRepublic), TOLL COLLECT GmbH (Germany), Société Nationale des Autoroutes du Maroc (Morocco), AVTODOR (Russia), NDS (Slovak Republic).

Full members are associations of companies or companies holding at least one tolled motorwaysection or a tolled construction in Europe and whose incomederivesprincipallyfromcollectingtollspaidby users.

Associate members are national associations or groups of toll motorways or concession holdersoperating innon-Europeancountriesadjacentanddirectly connected to the European members of the Association by land or by the Mediterranean sea, or–undercertainconditions–companiesinchargeofcollectingadistance-relateduserchargefromtheroad users.

Figure 2 – ASECAP network and members (as for 01.01.2013)

Source: ASECAP



3.2 Concession models applied to networks operated by ASECAP members2

ASECAP members operate their road networks under a number of different concession schemeswhich can vary mainly on the basis of the nature of the Concessionaire (i.e. private, public or private/public),obligationsoftheConcessionaire(e.g.buil-ding, maintaining, operating, provision of ancillaryservices, etc.) and financial aspects such as themechanism for settling and adjusting tolls. Fol-lowing, is provided a brief description of the legalframework of the concession models, of the obli-gations for theConcessionaireandof thefinancialaspects in each ASECAP full member.

Details concerning specificobligationswith regardtosafetyaredescribedintheparagraph3.2.1.

Austria - ASFINAG

Legal frameworkThe concession company ASFINAG is governedby private law and is 100% owned by the Republic of Austria, i.e. the Concession Authority is identical with the Concessionaire. The usus fructus contract between the Republic of Austria and ASFINAG en-ables ASFINAG to collect tolls on the Austrian pri-mary road network. The concession period of AS-FINAG is unlimited.

ObligationsTheConcessionaireASFINAGhastheobligationtomaintain,operateandfinancethecurrenthighway.Furthermore, it isobligedtobuildnewconcession

sections as set in the Federal RoadAct (BSTG –Bundesstraßengesetz). All expenses are financedfromtheASFINAGbudget.

Financial aspectsThe payment of toll constitutes a contract between ASFINAG and the users, where the user pay for usingtheroadnetworkofASFINAG.Thetollfeeisleviedwitharealtollingscheme(dis-tance dependent > 3,5t maximum gross weight,time-dependent <=3,5t) and on some sections (mainly tunnels) vehicles <= 3,5t also pay distance related toll instead of time-dependent toll.Toll ratesaredeterminedbyapplying theEUEuroVignetteDirective.Thetariffisdistinguishedwiththenumber of axles of a vehicles >3,5 t and the vehicles Euro-emissionclass.ForsomesectionsaccordingtotheEuro-Vignettedirectiveamark-upforcross-fi-nancing of trans-European railway networks is le-vied.Thetariffsforvehicles<3,5tarejustdistingui-shedbetweenmotorbikesandpassengercars,nofurther distinctions are made for these vehicles.

Croatia - HUKA

Legal frameworkMotorway concessions are based on the Public Roads Act and Concession Act as well as on parti-cularConcessionAgreementsbetweenthegrantor(State) and the Concessionaire whereby the State entrusts to the Concessionaire the entire responsi-bilityforbuildingandoperatingthemotorways.

2Source:InformationregardingFullMembersfromPerformanceSurvey2014andTolledinfrastructureswithinASECAP2007

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Atthetimetheconcessionshavebeengranted,thelengthoftheconcessionperiodhadbeenfixedat33 years. Reform of the Roads Act dated 2013 re-sulted in extension of the initial duration of conces-sion to maximum 60 years.

ObligationsThe Concessionaire or the motorway company is responsiblefordesigning,financing,building,main-taining,developingandoperatingtheinfrastructure.It has to comply with the location permit issued by the State, to adjust the infrastructure to traf-fic volume, and to provide annex services on themotorway.

Financial aspectsThe Croatian term CESTARINA is a fee paid by the user forusingamotorwaynetworkor facility. It isbasedondistancetravelledandonthecategoryofthevehicle(vehiclesareclassifiedin5categoriesonthebasisofnumberofaxles,heightandweightofthe vehicle).

In accordance with the Roads Act, users in Croatia payonlyformotorwaysandcertainfacilities(bridgeand tunnel); the rest of the road network is free. The tariffisdeterminedinaccordancewithcertaincrite-ria: costs of construction, operations, maintenance anddevelopment of the network, taking also intoaccount the level of GDP.

Inparticular,companiesareentitledtoapplydiffe-rent tariffs based on category, period of the day,parts and stretches of motorways, purpose of the vehicle, and euro emission class of vehicle.

Denmark - SUND & BAELT

Legal frameworkIn Denmark, tolls are collected only for two largebridgelinks:Storebaelt(inDenmark)andOeresund(between Denmark and Sweden). The Sund & Baelt Groupisgovernedbyprivatelawandis100percentownedbytheDanishstate.Theaffiliatedcompaniesareassignedthetaskofconstructingthe linksandlater on to be responsible for their operation.

ObligationsConcessionairesarerequiredtodesign,build,main-tain, improve, and operate the infrastructure.

Financial aspectsThe tolls levied on the users are used to repay loans that were raised for the construction costs and to pay for the operation and maintenance of links. The amount of the toll is determined on the basis of the length/heightof thevehicleand insomecases thenumber of trips. The amount of the toll is related to theconstructionandoperatingcostsand isdrivenby commercial considerations. The toll amount is not adjustedtotrafficvolume.

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France - ASFA

Legal frameworkThe French motorway system is based on the prin-ciple of the concession of public works and services (constructionandoperation)followingtheLawof18April1955.Theconcessionagreement,backedupbyadetailedspecification,isacontractwherebytheState(thegrantor)entruststoconcessionarycompa-nies,attheirrisk,theentireresponsibilityforbuildingandoperatingthemotorwaysforalimitedperiodoftime. Extension of concession contract is allowed up to1year(forcontractualagreement);extensionover1 year must be approved by a dedicated rule.

ObligationsThe companies are required to finance conduct thedesign of the feasibility study and to build,maintain,develop and operate the infrastructure. They are also obligedtoprovideancillaryservices.However,theyareundernoobligationtoadaptorexpandtheinfrastruc-tureinaccordancewithtrafficvolume,unlessthishasbeenspecificallymentionedintheoriginalspecification.

Financial aspectsIn France, a toll is the payment by the user of a fee for usingaroadinfrastructureornetworktherevenuesofwhicharedirectlyassignedtoalegallyindependententity responsible for the finance, construction,maintenance and operation of that infrastructure. Theuserpaysaccordingtothedistancedriven,thenumberofaxles, theweightof thevehicleand, forrecentlybuilthighways,itsemissionscoefficient.Thetariffisfixedinrelationtothecostsofconstruction,operation and maintenance.

Greece - HELLASTRON

Legal frameworkInGreece, theconcessionsaregenerallygovernedbyprivate lawandownedprimarilyby thegovern-ment. There are also totally private companies in Greece, subject to different legislation. The meanconcession period is 30 years. National rules foresee the possibility to extend the concession contract (up to 3 years) in case the expected internal rate of return (IRR) is achieved.

ObligationsTheConcessionaire isrequiredtomaintainand im-prove the infrastructure, supply annex services and adjustorexpandtheinfrastructureaccordingtotraf-ficvolume.

Financial aspectsThe user pays according to the distance travelledand the number of axles of the vehicle. The toll is determinedbytheoperatingcosts.

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Hungary - AKA Zrt.

Legal framework InHungary,theconcessionsaregovernedbypubliclaw. The tenure of the concession is 35 years and itrevertstothegrantingauthorityattheendofthecontract. There is no government guarantee andthe companies are free to determine their own bor-rowing policy. Although the government does notsupply any guarantee, it requires complete trans-parency from the Concessionaire, which operates as a private company. The mean concession pe-riod is 35 years. The national public procurement rulesdonotallowanymodificationtothetermsofthecontract,includingextensionoftheconcessioncontract.

ObligationsInHungary,theConcessionairesarerequiredtofi-nance, build, maintain, improve and operate the in-frastructure. Moreover the company has to adjust orexpandtheinfrastructureaccordingtothetrafficvolume.

Financial aspectsRoadconstructionprojectsarefinancedfromaspe-cialstatefund,dividedbythestatebudget,feededby the tolls pays by users. In case of concession contracts, road construction and operation shall be “pre-financed”bytheConcessionaire,andthestatepays availability fees.

Ireland - ITIA

Legal frameworkIn Ireland, the Public Private Partnership (“PPP”)contracts are awarded to a Concessionaire by the NationalRoadsAuthority(“NRA”)followingacom-petitive bid process.

ObligationsTypically,thePPPcontractsignedwiththeConces-sionaire requires thedesign, building, finance andoperationofthenewmotorway.Itisenvisagedthatthe Concessionaire will recover its initial and on-goingcosts througha combinationof i) subsidiesreceivedfromtheNRAandii)chargingtollsinres-pect of use of the road. In some cases where tolls arenotchargedtothepublic,costsarerecoveredsolely through availability payments received fromthe NRA.

Financial aspectsMaximum base tolls are set out in Bye Laws, which are created for each motorway where tolls are to be charged.Theyareincreasedorreducedbyapplyinga consumer price index each year in accordance withtheByeLaws.Tollsaredifferentiatedontheba-sis of number of axles and time of travel (for certain infrastructures).

3CIPEistheItalianInter-MinisterialCommitteeforEconomicPlanning,anentitysupposedtogiveadvicesandtocoordinatealltheissuesrelatedtotheeconomicandfinancialplanningatNationallevel.

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Italy - AISCAT

Legal frameworkIn Italy, the concessions are governed by law, bydirectives from CIPE3 and by the concession’scontract. Italian Concessionaires include 100% privately-owned companies as well as companies owned primarily by public authorities (local and re-gionalauthorities)butwithsomeprivatesharehol-ders.Theconcessionisreturnedtothegrantingau-thority at the end of its period of tenure. The mean of concession period is 30 years and extension of the concession contract is allowed only in cases complyingwiththeEuropeanlawsonconcessions.

ObligationsIn Italy, in compliance with the concession contract, the Concessionaires are responsible for: financing,building,maintainingandupgradingtherelevantsec-tionsofmotorway,includingthecollectionoftolls;or-ganisingandmaintainingusers’informationandassis-tanceservices;keepingaccountsasspecifiedbythegrantingauthority;providinggrantingauthoritywiththerelevant information needed to assess the favorable development of the concession, in compliance with the provisions of the concession contract.

Financial aspectsThe toll is a payment made by a user in return for using a specific infrastructure,with reference to theconstruction, maintenance and operation of that in-frastructure. The revenue is directly assigned to a

legally independent body responsible for financing,building,maintaining,andoperatingtheinfrastructure.

The determination of the toll amount is based upon the distance travelled, the number of axles, pollu-tionlevelsfortheAlpinetunnelsonly,andtheheightabovethefirstaxle.Theamountofthetollisrelatedtotheconstructionandoperatingcostsandisnotdriven by commercial considerations.

Norway - Norvegfinans

Legal frameworkTheStateisnotonlyinchargeofplanningbutalsoofbuildingandmaintainingtheroadnetworkinclu-dingmotorways(therearenoroadconcessionairesin Norway). The sector’s companies are only inchargeoffinancingcertaininfrastructuresandcol-lectingtolls.

Obligations Theconcession’sonlyobligationistosupplythene-cessaryfinancingandcollecttolls.

FinancingThe legislativebackground for tollcollection is theRoadAct,inwhichtollsareseenasawaytofinancepublic road projects, and under certain conditions also other infrastructure projects. Each toll project needs approval both locally and in the Parliament. Thetoll’samountisdeterminedbytheStateaccor-dingtotheconstructioncosts.

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The Netherlands - N.V. Westerscheldetunnel

Legal frameworkThe N.V. Westerscheldetunnel is the company in charge of building,maintaining and operating theinfrastructure (namely the Westerscheldetunnel) in order to recover the costs of the investment and maintenance via the collection of tolls.

In 2033 the infrastructure will be transferred to the Dutch Government.

ObligationsThecompanyisobligedtomaintainandoperatetheinfrastructure.

Financial aspectsAccording to law, theN.V.Westerscheldetunnel isentitledtodeterminetheamountofthetollcharges.Toll is collected as a fee, depends mainly on the len-gthandheightof thevehiclesand isdifferentiatedon the basis of number of axles and Euro standard.

Poland - AWSA

Legal frameworkThe typical concession models applied in Poland aretheprojectfinancemodel,wherethecashflowgenerated from tolls serves the debt repayment(granted for construction), maintenance and ope-ration or projects with public authority support in a form of availability payments to the Concessio-nairesandsecuringthedebtrepayment.Themeanof concession period is 30 years and the extension of concession contract is not allowed.

ObligationsConcessionaires are obliged to identify and orga-nizethefinancing,buildnewroads,orreconstructtheexistingones,bywayofadaptationoftheroadoriginally built by thegovernment, upgrade to therequirementsofamodernmotorway,operateandmaintaintheentiresectionaccordingtothecondi-tionsandrequirementsofConcessionAgreements.

Financial aspectsIn Poland there are both traditional concession schemeoffinancing(paymentbyusertoll)aswellaspublic-private contractswith repaymentsusingavailability scheme. Contrary to tolls collected on the motorway sections run by the State (GDDKiA –RoadAdministration),motorwaytollscollectedbyprivateconcessionariesaredefinedasafeeandaresubject to 23% VAT.

On the A1 Motorway, the level of toll is subject to levelsagreedwith thegovernment in theconces-sion agreement. The A1Motorway tolling systemis“closed”type,meaningthatthepaymentismadeattheendofthejourneyattheexitgates.Thetollamount is determined in function of the rate per km (vehiclecategory)andthedistancedriven.

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Toll rates, which shall not exceed the trash hold as defined in the concession agreement, aredefinedby the Concessionaires on the A2 Motorway (5 categories)andA4Motorway(2categories)andbytheMinisterontheA1Motorway(2categories)andtheA2IIMotorway(5categories).

Ingeneral,tollsratesfollowtherecommendationoftrafficadvisorsforecast.

Portugal - APCAP

Legal frameworkConcessions are governed by private law. Thegrantor isEP -EstradasdePortugalS.A, thena-tional road authority entrusted by the PortugueseGovernment. The concession overs at the end of thecontract,withoutchargesandwithnoreversionfunds.Extendingitisnotallowed.

ObligationsIncompliancewiththeconcessionagreement,theConcessionaires have the obligation of designing,building,maintaining,wideningoflanes(whenappli-cable) and operation (toll collection included). TheConcessionairehastoorganizethetollcollec-tionserviceasefficientlyandsafelyaspossibleandin a way that causes the minimum inconvenience and time loss to motorway users.

Financial aspectsGenerally, each Concessionaire fully finances itsoperationwith financial resources raised or gene-ratedautonomouslythroughtolls.

The amount of the toll is not driven by commercial considerations and is based upon traveled dis-tance,numberofaxlesandvehicle’sheightoverthefirstaxle.

The initial toll isdefinedby theStateaccording totheaveragetariffoftheyearofreferenceonthena-tional toll network. The Concessionaire may revise tollratesonthefirstmonthofeachcalendaryear.

Serbia - PUBLIC ENTERPRISE “Roads of Serbia”

Legal frameworkAll motorways in Serbia are State-owned and PE “Roads of Serbia” is wholly-owned by the State.Currently, there are no concession companies for motorway operation or maintenance in Serbia.

ObligationsPE«RoadsofSerbia» is inchargeofmaintaining,protecting, exploiting, developing and managingstate roadsof Iand IIcategory in theRepublicofSerbia.PE“RoadsofSerbia”isalsoresponsiblefortoll collection on motorways in opened and closed toll-collection systems.

Financial aspectsToll,financialloans,budgetoftheRepublicofSer-bia, other sources pursuant to the Law are the meanstofinancetheconstructionandreconstruc-tion, maintenance and protection of public roads.

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Slovenia - DARS

Legal frameworkIn Slovenia, the concession contract between Re-public of Slovenia (the Concession Authority) and DARSd.d.(thesoleexistingConcessionaire,ajoint-stock company, established by law and 100% State-owned)hasbeensignedfortheentiredurationofthe motorway construction and/or for the period of repaymentobligationsonloansanddebtsecuritiesraised and/or issued to this end, but not lower than 20 years. National rules allow contract extension up to 10 years (maximum duration 50 years).

ObligationsIn accordance with the national law, DARS is in charge of financial engineering, preparing, organi-singandmanagingconstructionandmaintenanceof the motorway network, and is responsible for themanagementofmotorways in theRepublicofSlovenia.

Financial aspectsInSlovenia,thetollisappliedasatollingtool,sinceit is paid directly to the Concessionaire, however, toll tariffsareregulatedbytheGovernment.

DARSd.d.asaConcessionairefinancesall itsac-tivities out of toll (toll represents approx. 94% ofDARS d.d. revenues) and other revenues (leases, overweight load transport, telecommunications,easements).

DARSd.d. only has the right to suggest changesinthetollingpolicyregardingtheamountofthetollper toll categories, Euro-emission classes, timeoftravel etc., but final decision is made by the Go-vernmentof theRepublicofSlovenia–whoapart

from the Concessionaire’s proposal, usually takesinto account also the public opinion and the opinion of the users, mainly domestic haulers. The same goesforthedeterminationofthepriceofvignettes:DARSd.d.canproposechanges,butfinaldecisionis made by the Government.

Spain - SEOPAN

Legal frameworkConcessions are governed by private law. Theawardof a concession takesplace throughapu-blictender,calledtogetherbytheMinistryofPublicWorksonbehalfoftheSpanishStateorbyRegio-nalGovernments.EligibleforawardareSpanishorforeignindividualsandcorporations,withfullcapa-city to act, and that do not incur any prohibition to contract, in accordance with what is established in thePublicAdministrationContractsLegislation.

The concession for constructionwork and equip-ment followed by the operation of the service will be awarded by Royal Decree, approved by the Cabi-net,attherequestoftheMinistryofPublicWorks,tothe most suitable bid. This Royal Decree sets itself upasthedeclarationofpublicutilitywithregardtoexpropriation. A similar process takes place at a re-gionallevelinthecaseofthoseprojectsunderthecompetenceareaofregionalAdministrations.

TheConcessionairemanagestheservice,purposeof the concession, under the supervision, inspection andcontrol of the awardingAdministration,whichwillbeexercisedbytheGovernment’sDepartmentofNational Toll Road Concessionaire Companies. The Deputy Secretary of the Ministry of Public Works is, atthesametime,theGovernment’sRepresentative

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for National Toll Road Concessionaire Companies, asstatedinRoyalDecreeregulatingthestructureofthe Ministry of Public Works.

Generally, the duration of concessions is 40 years for construction concessions (with the possibility of extension until 46 years) and 20 years for operation concessions (with the possibility of extension until 25 years).

ObligationsTheconcessioncompaniesarerequiredtofinance,build, maintain, improve and operate the infrastruc-ture.Theyare required toguarantee thebest ser-vice to the user and keep the motorway in the best conditions.

Financial aspectsThe Concessionaire is committed to structure the financingofthemotorwayusingitsownresourcesorexternalones(lookingintofinancemarket,issuingbonds).

InSpain,atollisthepaymentbyauserforusingaspecificinfrastructureaccordingtothedistancetra-velled and some physical parameter of the vehicle (number of axles and presence of dual tyres).Therearethreetariffcategoriesaccordingtovehicleclassification.

Every year, the concessionaire, previous approval bytheawardingauthority, increasestoll rates.Themethod used to calculate the increase of toll rates onconcessionsawardedisbasedontheprevious’year increase in cost of living, plus the differencebetweentheforecastedandrealtraffics.Thetollratecan be increased every year.

All the revenues collected from the users (except taxes as VAT) are allocated to the Concessionaire who has to invest on the proper maintenance of the roadduringalltheperiodofconcessioncontract.

United Kingdom - Macquarie Motorway Group

Legal frameworkMacquarieMotorwayGroup-MidlandExpresswayLtd has a 53 years concession to build, operate and maintain the M6toll road. At present time, the concession will be held for a further 40 years period after which it will be handed back to the Government.

ObligationsThe company was appointed to build, maintain and operate the M6 toll road.

Financial aspectsTheoperatordefinestolllevelswithamarket-ledap-proach, without any interference from Government. Thereare fivebasic classifications towhichdefinetoll:motorcycle,car,carwithtrailer,lightcommercialvehicles and HGVs. Separate rates apply for wide loadsandslowmovingvehicles.

The table below summarizes themain aspects ofconcessionmodelsandroadchargingpoliciesap-plied in the concessions under ASECAP members management.

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Table 2 – ASECAP members: main aspects of concession model, types of payment and charge differentiation

Full members

NO. AND NATURE OF COMPANIES

CONCESSION PERIOD TYPES OF PAYMENT CHARGE DIFFERENTIATION

Public Mixed capital

Private Total Average concession

period

Extensionperiod

Light vehicles

Heavy vehicles

Euro standard

Period of day Axles

Austria 1 1 Unlimited - Distance- based

Distance- based ✓

✓ (Brenner motorway) ✓

Croatia 2 2 4 30 years Maximum60 years

Distance- based

Distance- based ✓ ✓

Denmark 2 2 - - Distance- based

Distance- based ✓ - ✓

France 2 21 23 30 years 1 year4 Distance- based

Distance- based

✓ (selected tunnels)

✓ (selected roads) ✓

Greece 8 8 30 years3 years,

underspecificcondition5

Distance- based

Distance- based - - ✓

Hungary 5 5 35 years No Time-based Time-based - - -

Ireland 9 9 35 years - Distance- based

Distance- based -

✓ (Dublin port tunnel, only

vehicles <3.5t)✓

Italy 2 21 4 27 30 yearsYes, under specific

condition6

Distance- based


The Netherlands 1 1 30 years - - Time-based - - -Norway 38 38 - - - - ✓ - ✓

Poland 4 4 30 years No Distance- based


Portugal 1 20 21 30 years No Distance- based


Serbia 1 1 Unlimited - - - ✓ ✓(day/night) ✓

Slovenia 1 1 20 years 10 years (maxi-mum 50 years) Time- based Distance-

based - ✓ (selected roads) ✓

Spain 3 29 32

- 40 years for construction concessions

- 20 years for operation concessions

- Maximum 46 years for construction concessions

- Maximum 25 years for operation

concessions

Distance- based


United Kingdom 1 1 50 years No - Time-based - ✓ ✓

Total 17 24 139 180

Source:ASECAP,nationalreports,PerformanceSurvey2014;EvaluationoftheimplementationandeffectsofEUinfrastructurechargingpolicysince1995-Final(ReportRicardo–AEA/ECDGMOVE);EuropeanCommission

4 Extension over 1 year must be approved by a dedicate rule.5 National rules foresee the possibility to extend the concession contract in case the expected IRR is achieved. 6ExtensionoftheconcessioncontractisallowedonlyincasescomplyingwiththeEuropeanlawsonconcessions.



3.2.1 Obligations with regard to safety improvements 7

Nowadays, as in the past, concession companies play an important role in the development of the safety level of the road network. As a matter of fact, safety concerns tend to be taken into account since the early stage of a concession scheme. Beyondthe general obligations concerning the construc-tion, maintenance and operation, road concession contracts tend to foresee specific obligations fortheConcessionaireregardingsafety improvementsalong the road network (e.g. pavements mainte-nance,safetybarriers,roadlighting,etc.).Inparticu-lar, the results of the Performance Survey revealed how in six countries (i.e. Austria, Italy, Poland, Slove-nia,GreeceandHungary)thecontractualschemesinforceregularlyforeseeobligationswithregardtosafety improvements.

Further,incaseunexpectedobligationsofthiskindarise(e.g.needtoupgradepavements),therelatedcostsarefundedindifferentwaysamongASECAPmembers:

• in Austria, Italyand Slovenia, such costs are included fully in the tolls paid by users;

• in France and Spain, such costs are fully or partially included in the tolls paid by users;

• in Poland such costs are totally borne by the Concessionaire without compensation;

•inGreecesuchcostsare fundedbygovern-mental authorities.

The relevance given by the public authorities tosafetyconcernsisconfirmedbythemonitoringac-tivity put in place by the ASECAP members. As a matter of fact, the Public Authority in each country monitorsdifferentsafety indicatorsandmakespe-riodicallyonthegroundinspections,inparticular:

• In Austria, the public authority inspects, via on spot inspections and examination of plans and designs,ifASFINAGobeysthesafetyrequire-mentsandobligations..Thenumberofacci-dentsandfatalitiesisahighprioritymatterandmajorpoliticalgoalforthestate/concessiongrantor.

• In Italy,thegrantingauthorityverifiesconstant-ly, by means of inspections, the safeness sta-tus of the motorways, on the basis of many in-dicators,including:thepavementsconditions,the efficiency of the safety barriers, the ligh-ting (where applicable), the compliance withall the technical parameters defined by theprescribed standards, etc. Furthermore, it is stipulatedthatwithintheannualtariffsupdatemechanism, an indicator about levels of safety or accidents has to be taken into account.

• In France, most security improvements are included in “Contrats de plan”, stipulated for a 5 years period and including investments toupgradetheconcessionandtariffincreasestofinancethem.Securityimprovementscouldbefunded by Concessionaires prior the inclusion in a Contrat de plan. Most often, the invest-ments are fully or at least partially compensa-ted later on.

• In Spain, no specific obligations relating tosafety are considered in the toll concessions contracts,nevertheless,thereisageneralobli-gationtokeepandmaintainthemotorwayonthe best conditions, under the strict supervi-sionofthegrantingauthority.Onshadowtollsconcessions, safety is a parameter included in theindicatorsusedtoassessthegoodopera-tion of the road.

• In Poland, the Public Authority monitors/conducts inspection of signing of the mo-torwayforcompliancewithapproveddesign,ongoing maintenance, preparation for wintermaintenance, control infrastructure compo-nents related to the safety, toll collection. Such checks are held several times a year.

• In Slovenia, the safety improvements are definedon thebasisof thenumberof trafficaccidentsthatoccurredonhighwaysandex-pressways. The monitored indicators are num-ber of killed and seriously injured persons.

• In Greece, the Public Authority monitors the conditionofbarriers,thelightinglevel,theas-

7 Source: Performance Survey 2014



phalt surface characteristics (surface friction, regularity, rutting), theconditionofsignsandroadmarkings,equipmentintunnelsetc.Theinspections by the Public Authority are made according to the provisions of the ContractDocuments.

• In Hungary, the Public Authority periodically checks the compliance with a broad spec-trum of technical requirements and legalprovisions applicable for road operation and management.

3.3 Value added of the road toll

concession

Concessionaires have successfully deployed and operatedtollroadsthroughoutEuropeformorethan50 years. The value added provided by the road toll concession sector can be declined in terms of physi-cal results, such as the development of the network, the share of traffic served and the contribution tothedevelopmentof technology supporting the tolloperation, and in terms of socio economic impacts onthelocalandregionalareas,suchasthereduc-tionoftraveltime,thecontributiontostatebudgetby means of taxation and the creation of new jobs.

3.3.1 Characteristics of ASECAP network: development of the network, share of traffic, safety performance, contribution to the development of technology8

ASECAP members operate more than 55% of the total motorway network in Europe. 775 of the 30,501 km of the ASECAP networks are operated by concessionaires in 5 Countries: France, Italy, Spain,PortugalandAustriaare thecountrieswiththelongestconcessednetwork(asawholetheyarehereinafterreferredtoas‘largernetworks’)

It has to be noted that in Spain the concessed network is less than¼of the national high capa-cityroadnetwork(seetablebelow).Theremainingnetwork –in some cases running in parallel to analreadyexistingtollroad−ismademainlyoftollfree

expresswaysdirectlymanagedbytheStateorRe-gionalGovernments.

Table 3 –Length of ASECAP network

Full members Network length [km]

% on the total national mo-

torway network

Austria 2,177 100%

Croatia 1,289 100%

Denmark 34 3%

France 9,048 78%

Greece 1,659 87%

Hungary 1,145 74%

Ireland 337 37%

Italy 5,814 86%

The Netherlands 20 1%

Norway 911 NA

Poland 468 34%

Portugal 2,943 98%

Serbia 603 100%

Slovenia 607 79%

Spain 3,404 23%

United Kingdom 42 1%

Total 30,501 55%

Source: ASECAP, Performance Survey 2014

Infivecountries (Austria, Denmark, Netherlands, Serbia and Slovenia) motorways (or toll infrastruc-tures)areexclusivelymanagedbytheStatethrough100% controlled companies.

In Croatia, Italy and Portugal some motorways are operated by mixed capital companies, but only in Italy the majority of the concessionaire companies havemixedcapital although, in termsof lengthofthe network, the vast majority is operated by private companies. It seems that also in Croatia this model can be more extensively applied in the future (this subject is currently under examination by the go-vernmentthatisaimingatreducingthepublicsharein motorway O&M). In Portugal just Vialitoral, the companyoperating themotorwaysof theMadeira

8TheanalysescontainedinthissectionreferonlytoASECAPfullmembers,towhomquestionnaireswereaddressed.



island, is partially owned by a public body (Madeira Region).

In Austria, out of 3 concession companies (ASFI-NAG, GROHAG, Felbertauern AG), just one (ASFI-NAG) operates motorways. The other 2 companies operate toll mountain roads. In this study only ASFI-NAG and its network is taken into account.

In Denmark, the Netherlands, Norway and UK only specific sections of the network are underconcession(i.e.bridges,tunnelsorshortmotorwaylinks).

The Figure below shows the evolution of theconcessed networks in the last 10 years.

10,000

9,000

8,000

7,000

6,000

5,000

4,000

3,000

2,000

1,000

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Largernetworks

km

1,800

1,600

1,400

1,200

1,000

800

600

400

200

0

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Smaller networkskm

Greece

Croatia

Hungary

Norway

SerbiaSloveniaPoland

Ireland

United kingdomThe Netherlands

France

Italy

PortugalSpain

Austria

Source: ASECAP

Figure 3 – Evolution of the ASECAP motorway network



Among the larger networks, the recent sharp in-crease of Portuguese network leaps out imme-diately.In2013,infact,severalregionalmotorwayspreviously operated under shadow tolling andconceded to private companies, turned into real tol-lingconcessions,thereforethenetworkincreasedofabout 1,200 km.

Asharping increaseoccurredalso inGreece after 2009.Inthiscasetheexpansionisduetothefactthatmanyexistingmotorwayspreviouslyoperatedby the State where concessed to private companies.

3.3.1.1 Tolling equipmentInaccordancewiththe‘pay-per-use’principle,mostpartoftheinfrastructureisfinancedbyafeechargedtotheusersandgenerallycollectedattollstations.Vignette9 - or ‘e-vignette’ - systems are currentlyused only in Austria, Hungary and Slovenia (only forlightvehiclesinallthreecountries).

Figuresbelowshowthenumberoftollstationsandlanes for each country, both in absolute and relative terms.

Austria, where a free-flowsystem10 is in operation forheavygoodsvehiclesabove3.5 tonnes, is thecountrywiththehighestdensityoftollstations(i.e.No. of toll stations / km)11.

Amongother countries, besidesUK –where only40kmareinconcession-,othernetworkswithhighdensity of toll stations are Norway, Italy, Croatia and Portugal.

In terms of toll lanes, besides Denmark(twobridgesin concession), UK and the Netherlands (one tun-nel inconcession),countrieswiththehighestden-sity are Austria, Spain and Italy.

In absolute terms, Austria, France and Italy are the countrywiththehighestnumberoftollstationsandlanes.

In the Netherlands and Ireland, almost all toll lanes are ETC type. Other countries with high ETC12 share (more than 75%) are Austria, UK, Denmark and Norway.

Figure 4 – No. of toll stations (as for 01.01.2014)

Source: ASECAP

9Vignetteisaformofroadpricingimposedonvehiclesbasedonaperiodoftimeinsteadoftheusualroadtollmethodbasedondistancetravelled.10Free-flowsystemsallowtollstobepaidwithoutanyneedtochanneltrafficand,aboveall,withoutanyneedtostopthevehicle.Theyconsistofportalsthatcovertheentirelane,onwhichcameras,antennasandclassificationsystemsdetecton-boardunitsand/orvehicleplates.

11Inthiscaseeachportalisconsideredasasingletollstation12 Electronic toll collection

1,000

900

800

700

600

500

400

300

200

100

0

450

400

350

300

250

200

150

100

50

0

Abso

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val

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00)

Aust

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Den

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Hun

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Value / km (x 1000) Absolute value



Figure 6 – % ETC/toll lanes (as for 01.01.2014)

Figure 5 – No. of toll lanes (as for 01.01.2014)

Source: ASECAP

Source: ASECAP

6,000

5,000

4,000

3,000

2,000

1,000

0

100

90

80

70

60

50

40

30

20

10

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1,600

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1,200

1,000

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Abso

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Valu

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Hun

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Italy

The

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Nor

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Pola

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Port

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Serb

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Slov

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Spai

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Uni

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Kig

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Aust

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Cro

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Den

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Fran

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Gre

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Hun

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Pola

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Serb

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Spai

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Value / km (x 1000) Absolute value

%

96

68

78

56

99

55

100

87

36

59

12

42

89

0 0NA



3.3.1.2 TrafficFiguresbelowshowthetrafficevolution inthe last10years.Traffic isexpressedboth in termsofvo-lume(averagedailytraffic–ADT-)anddistancetra-velled (veh-km).

In2013thecountrywiththehighestADTwastheUnited Kingdom (about 40,000 vehicles) , followed by Italy and Austria.

Consideringthenumberofvehiclestravelling,coun-trieswithhighestlevelsareFrance and Italy (more than 75 bn of veh-km per year). All other countries registerlessthan30bnofvehicles-kmperyear.

Trafficisgenerallystronglyinfluencedbyeconomictrend;economicgrowthtendstoleadtoincreased

travel and transport of goods. In a more rapidlygrowingeconomy,agreaterproportionof thepo-pulationislikelytobeworking,hasmoredisposableincome and more products are manufactured which must be transported and for which raw materials must be supplied.

Of course, it may also happen the opposite: in case of economic slump,trafficmovesdownward.Thisis the phenomenon that many European countries areobservingintherecentyears.

Nevertheless, despite the current economic glo-balcrisis,trafficinsomemotorwaynetworksisstillgrowing (e.g. Austria, +5% in the 3-year period 2010 - 2013; Poland, even +13% from 2012 to 2013).

Figure 7 – Average Daily Traffic (ADT) on the ASECAP network


45,000

40,000

35,000

30,000

25,000

20,000

15,000

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Largernetworks

50,000

45,000

40,000

35,000

30,000

25,000

20,000

15,000

10,000

5,000

0

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Smaller networks

GreeceCroatia

Hungary

SloveniaPoland

United Kingdom

The Netherlands

France

Italy

PortugalSpain

Austria

DataofDenmark,Ireland,NorwayandGreece(from2009)arenotavailable(onlynumberoftransactionsisregistered).DataofPortugalrefersto7historicalAPCAPmembersDuetoachangeinthemeasuringmethodin2008,dataofAustriafrom2004to2007cannotbecomparedwiththefollowingfigures.



Figure 8 – Total veh-km travelling on the network (10^6 veh-km) on the ASECAP network


90,000

80,000

70,000

60,000

50,000

40,000

30,000

20,000

10,000

0

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Largernetworks

8,000

7,000

6,000

5,000

4,000

3,000

2,000

2,000

1,000

0

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Smaller networks

France

Italy

PortugalSpain

Austria

DataofPortugalrefersto7historicalAPCAPmembers.Data of Norway and Serbia are not available

SloveniaGreece

CroatiaHungary

Poland

United Kingdom

The NetherlandsDenmark

Ireland

3.3.1.3 SafetyOne of the most remarkable features of the service provided by toll motorways is safety. It isunques-tionable that safety is duly taken into account in everystageofamotorway’slifecycle,i.e.planning,constructionandoperatingstage.

Alltolledmotorwayshavespeciallydesignedequip-ment to ensure road safety, such as perimeter fences,anti-glarepanels,lightingattollstationsandsemi-urbanstretches,cutting-edgeoperationalandtrafficmanagementcentres,closed-circuittelevision,traffic data collection systems, 24 hour customercare, SOS posts and meteorological stations and

other safety systems. There are fast road patrols for collectinglostitems,providingearlyassistanceandwarningsofanyaccidentsand there isanefficientwinterservicebasedon24hourmonitoringofroadandweatherconditions.Trafficismadesafeatroadworks sites through early and efficient warnings,roadmarkingandthesettingupofprotectivefencesincludingTMAs(truckmountedattenuators).

Priority isalwaysgiven to thesafetyofpeopleandgoods travelling throughout themotorwayconces-sion network. This concerns both motorists and lorry drivers,whocanrestinfullyequippedservice and parking areas.



Consistent and continuous investments are made by Concessionaires in research and development of new and more efficient technological systemsaimed to improve safety levels. It is worth under-lining thatmany typesof equipment that arenowefficaciously installed in European road and mo-torway networks have been previously developed

bymotorwaycompanies (e.g.safetybarriers, traf-ficcontrolsystems,signsandmarkings,automaticspeed control systems, etc.). An example is descri-bed in the Case Study 1.

Figuresbelowshowroadsafetytrendsofaccidentand fatality rates (i.e. absolute value / veh-km) 14.

Figure 10– Fatality rate 2012

Figure 9– Accident rate 2012

Source: ASECAP, national reports, Performance Survey 2014

Source: ASECAP, national reports, Performance Survey 2014

12.0

10.0

8.0

6.0

4.0

2.0

0.0

0.8

0.7

0.6

0.5

0.4

0.3

0.2

0.1

0

Aust

ria

Cro

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Den

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Fran

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Slov

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Aust

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Den

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Spai

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Data refer to accidents with injuriesData of Norway and Serbia are not available

Data of Norway and Serbia are not available

14Itshouldbenotedthattheaccidentrateitishighlyinfluencedbythelocalmethodsofstatisticalsurveys(i.e.themeaningof“accident”maybedifferentbetweenthevariouscountries).Accordingly,foramorereliablecomparison,itisrecommendedtoconsiderthefatalityrates.

Valu

e / 1

00 m

ln v

eh-k

mVa

lue

/ 100

mln

veh

-km



Source: Performance Survey 2014

Besides Denmark and Netherland, where only short specificroadlinksareunderconcession,thelowestaccident and fatality rates are observed in France.

In 2012, Portugal and Italyhave thehighestacci-dent rates (> 8 accidents/100 mln veh-km) but their fatality rates are on average.Croatia, Greece and Hungaryhavethehighestfatalityrates(>0.4fatali-ties/100 mln veh-km).

Intheperiod2004–2013particularlysignificantim-provementsareobservedinallkeycountries.Higherreduction trend of fatality rate are observed in Aus-tria (-76%), Spain (-57%) and Italy(-49%).France, alreadystartingfromgoodsafetyperformances,fur-ther reduced the fatality rate by 16%.

Sincethedistancetravelledbyvehiclesisafigurera-rely available for other road networks, a reliable com-

Figure 11– Evolution of fatality rate (only larger networks)

0.8

0.7

0.6

0.5

0.4

0.3

0.2

0.1

France

ItalyPortugal

Spain

Austria

15ASFA–Motorwaysafety/Fatalaccidents/Keyfigures(2013)16 APCAP–Asvantagensdeviajaremautoestradas(2013)

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

parison between safety rates on motorway and road network is not feasible. However, few cases have been subject to specific analyses: ASFA (France)15 and APCAP (Portugal)16 estimates that the level of safety on motorways is 4 to 5 timeshigherthanfortherestoftheroadnetwork(thePortuguesecaseisreported in detail in the Case Study 2).

Table 4 compares the evolution of fatalities on the motorways with the rest of the road network in three countries. The performance of the motorway networks is significantlybetter.The roadsafety im-provementisabout10%higheronthemotorways.It is worth to underline that ASECAP network has met the objective of the European Commission to halve the number of fatalities in 10 years, a couple of years before the rest of the network.

Table 4 – Road safety evolution 2002/2012: comparison between No. of fatalities on road and motorway networks

Road network Motorway network

Country 2002 2012 D% 2002 2012 D%

Austria 956 531 -44% 152 59 -61%

France 7,655 3,653 -52% 328 143 -56%

Italy 6,980 3,653 -48% 625 250 -60%Source: European Commission, national reports



The Safety Tutor is a system developed by Autos-trade per l’Italia and made available since 2005 to theItaliantrafficpolicetorecord,onthebasisofthetimespenttocoveragivendistance,theaverage speed of a vehicle.

The Safety Tutor has been installed on stretches of the Italian motorway network with a mortality rate overtheaverage.Itallowsspeedingsanctionstobeissuedautomaticallyanddonotrequire theactualpresenceoftrafficpoliceonthemotorway.

Thevehicles’averagespeedismonitoredinalllanesoverlongsectionsofthemotorway(generally10to25kminlength).Thesystemisoperationalunderall

weatherconditions(fog,rain,etc.)dayandnight.Itcandetectvehiclestravellingwiththeirlightsofforin the emergency lane, twooccurrences that putthe safety of other motorists at risk, for which sanc-tions are particularly severe.

The system, in force on over 2,500 km of the Italian motorway network, has had a significantimpact on reducing average speed (-15%), maximum speed (-25%),and,asaconsequence, accidents rates17:

• Fatality rate: -51% • Injury rate: -27% • Accidents rate: -19%

Figure 12 – Safety Tutor: how it works

Source:Infotraffico.autovie.it

Case Study 1 - The ‘Safety Tutor’ project in Italy

ORA / TIME - 15:05:35TARGA/NUMBER PLATE - AA 000 ZZTIPO/TYPE - AUTOVETURRA

ORA / TIME - 15:15:00TARGA/NUMBER PLATE - AA 000 ZZTIPO/TYPE - AUTOVETURRAVELOCITA / SPEED -

120,00 km >

ORA / TIME - 15:05:30TARGA/NUMBER PLATE - XX 999 YYTIPO/TYPE - AUTOVETURRA

ORA / TIME - 15:10:35TARGA/NUMBER PLATE - XX 999 YYTIPO/TYPE - AUTOVETURRAVELOCITA / SPEED -

180,00 km >SANZIONE/SANCTION

15 km

17Datareferredtothefirst12monthsofoperation.



Case Study 2 - Benefits to travel on the Portuguese motorway network

APCAP,thePortuguesemotorwayassociation,hasrecently demonstrated the assumption that mo-torways are safer than other roads. This study is contained in the report ‘As vantagens de viajar em autoestradas’(‘Theadvantagesoftravellingonmo-torways’)(June2013).

Just analyzing the recent historical development(Figure below) of traffic and accidents, both onmotorways and national road network, it is plain thatthedifferentialreductionofaccidentsismoresignificantinthemotorwaynetwork.

Figure 13 – Evolution of traffic (blue line) and accidents (green line) on the motorways (left) and other roads (right)

Source: APCAP

Nevertheless APCAP wanted to study in detail this phenomenon and analyzed 10 routes, comparingmotorway trips with those carried out on the ordina-ryroadnetwork.AccidentsandfatalitiesondifferentroutesaresummarizedintheTablebelow.The analysis shows that for all trips, the accident rate on the motorway is lower compared to what

recorded on the alternative road. Sometimes the differencebetweentheaccidentratesinthesetwotypesofrouteisquiteevident,asfortherouteLis-bon - Albufeira, where the fatality rate recorded in alternativeroadismorethan7timeshighertheoneofmotorway.Figurebelowsummarizesgraphicallythese results.

Table 5 – Accident data in selected routes

Route

Accident rate Fatality rate

Road Motorway D % Road Motorway D %

Lisboa - Nazaré 58.5 15.3 -74% 1.1 0.2 -81%

Santarém - Peniche 21.7 7.0 -68% 0.9 0.0 NA

Espinho - Valongo 44.0 13.3 -70% 2.1 0.6 -72%

Cascais - Mem Martins 13.3 10.3 -23% 0.6 0.0 NA

Braga - Apúlia 46.9 5.8 -88% 1.0 0.8 -23%

Lisboa - Tróia 46.6 21.4 -54% 4.1 1.1 -74%

Lisboa - Albufeira 42.7 13.0 -70% 4.7 0.6 -86%

Lisboa - Porto 43.0 12.0 -72% 1.7 0.6 -64%

Porto - Valença 70.0 15.1 -78% 2.6 0.4 -84%

Leiria - Mira 40.2 7.9 -80% 1.4 0.9 -34%

Source: APCAP

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

160140120100806040200C

ircul

açao

Sin

istra

lidad

e

-60%

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

Circ

ulaç

ao S

inis

tralid

ade

160140120100806040200

-47%



Case Study 3 – Comparison between toll and non-toll network in Spain

Figure 14 – Comparison of accident (left) and fatality (right) rates between motorways (blue) and other roads (green)

Toll motorways are, in absolute and relative terms, the safest roads of the Spanish road network. In fact, Spain has managed to comfortably exceedthe European Commission’s target of halving thenumber of fatalities in 10 years (from 2001 to 2010), achievinga reductionof61.5% (79.8% ifwe takedata from 2001 to 2012).

Thephysicalandgeometriccharacteristicsoftollmotorways, itsdesignandhigh-qualitymaterialsusedforitsconstruction,itsgoodequipment,theefficient and personalized toll motorway mana-gement,andaregularandperiodicmaintenanceperformed throughout themotorwayconcessionlifecycle,guaranteetheroadsafetystandards.

Case Study 2 - Benefits to travel on the Portuguese motorway network (suite)

Source: APCAP

50454035302520151050

2.5

2

1.5

1

0.5

0

3Xmaior 4X

maior

EN AE EN AE

N° A

ccid

ente

s / 1

08 vkm

s

N° v

ictim

as m

orta

is /

108 v

kms

Figure 15 – Evolution of traffic accidents fatalities in the Spanish road network according to the type of road (1994-2012)

Source: Anuario Estadístico 2012 Ministerio de Fomento

700

600

500

400

300

200

100

0

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

205

34

Tolled motorways Free motorways and expresseways



Figure 16 – Evolution of traffic accident victims in the Spanish Road Network according to the type of road (1994-2012)

Case Study 3 - Evolution of traffic accidents fatalities in the Spanish road network according to the type of road (1994-2012)

The reduction of fatalities in the State toll road network has been -82.4%, meanwhile a -64.1%

Source: Anuario Estadístico 2012 Ministerio de Fomento

reduction has occurred in free motorway and highways.

9,000

8,000

7,000

6,000

5,000

4,000

3,000

2,000

1,000

0

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

Tolled motorways Free motorways and expresseways

The reduction of accidents with victims in the Spani-sh toll motorway network has been -17.3%. Howe-ver, accidents with victims in free motorways and highwayshasincreasedby41.8%.

The table below shows that the toll motorway networkhas,ingeneralterms,adangerousnessrateapproximately half of what the free toll motorways andhighwayshave.

Table 6 – Comparison of dangerousness rate

Toll Motorways Motorways Highways

Fatal accidents rate 0.15 0.26 0.26

Fatalities rate 0.17 0.26 0.29

Dangerousness rate 6.92 12.78 7.5



3.3.2 Socio - economic relevance of road toll concessions

Transport infrastructure projects such as mo-torways have significant impacts on the develop-mentofregionaleconomies.Inparticular,thesocio economic relevance of transport projects such as toll road motorways can be evaluated in terms of directuser’sbenefits and of socio economic spill overs(seeFigure17).

AccordingtotheprinciplesoftheCostBenefitAna-lysis, themaindirectuser’sbenefitsgeneratedbyroad infrastructure investments are:

• Travel time:timesavingsresultfromanimpro-vementintheefficiencyofthetransportsystembyshorteningroutesorincreasedtrafficfluidity.

• Safety: greenfield and/or brownfield invest-ments in road infrastructure projects should allow reductions in risks of accidents and ca-sualties.Safetysavingsareusuallyvaluedasmonetarybenefitstosocietyasawholedueto the reduction in number and relevance of accidents(seeparagraph3.3.1.3).

The most relevant socio economic spill overs (wider ef-fectswithimpactatregionaland/ornationallevel)are:

• Accessibility: road transport projects are usually meanttoimprovetheaccessibilityofagivenareaorregionbyreducingtraveltimeorincreasingthepotential to travel. A better level of accessibility mayincreasethemarketsizeformanufacturing,tourism and/or labour activities, leading to in-creased competition and/or centralisation.

• Employment: the impacts of construction, operation and maintenance of a road in-frastructure on employment include direct, in-direct and induced employment.

• Efficiency: time and cost savings derivingfrom the implementation of a road transport in-frastructurewouldallowtheindustryinagivenregionto improve itsproductionanddistribu-tion activities to create new business opportu-nities and to increase the internal competition, leadingtofurtherincreasesinprofitability.

• Social inclusion: road transport projects pro-perly implemented would improve the acces-sibility andmobility of those regions sufferingfrom economic and social problems.

Figure 17 – Socio economic relevance of road transport projects

TRAVEL TIME SAVINGS

SAFETY

ACCESSIBILITY

EMPLOYMENT

EFFICIENCY

SOCIAL INCLUSION

CONTRIBUTION TO STATE BUDGET

socio-economic relevance

Direct users Socio-economic spill overs



• Contribution to state budget: road infrastruc-tureprojectsgivearelevantcontributiontothenational state budget by means of differentforms of taxation over time, from construction activities to operational ones.

Inordertogiveevidenceoftherelevantcontributionof the road toll concession sector to the development of the road transport network as a whole and to the socio economic improvement at local level, it has tobe investigatedtheyearlyvolumeof investmentsmade by the concessionaires, and the overall contri-butiontostatebudgetandemploymentrateduetothe road concession sector18.

Motorway companies made relevant investments over time in new motorways and in existing onesgeneratingpositive impacts in termsofdirect, indi-rectand inducedvalueaddedat localand regionallevel. Inthefollowingtablesthe investments innewmotorways(seeFigure18)andinexistingones(seeFigure19)inthelast10yearsarereported.

In theperiod2004–2013, the total amountof in-vestments in new motorways with regard to thesample of respondent ASECAP members was about 28,598 MEUR19. Italy is the country that invested more in the reference period: 14,120 MEUR as total amount invested in the reference period.

Further, several ASECAP members planned future investments in new motorways:

• Italy planned investments for about 16,000MEURfortheperiod2013–2020;

• France planned investments for about 1,800 MEUR by 2014;

• Slovenia planned investments for about 320MEURfortheperiod2014–2016;

• Portugal planned investments for about 280 MEUR by 2014;

• Austria planned investments in new and in existing infrastructure for about 4,500 MEURfortheperiod2014–2019.

Figure 18 – Past investments in new motorways in the last 10 years (millions €/year)*

* Source: Performance Survey 2014DataregardingAustriaalsoincludepastinvestmentsinexistingmotorways

2,500

2,000

1,500

1,000

500

0

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

18ThefollowingdataandfiguresregardsolelytheASECAPmemberswhichprovidedtheinformationrequestedinthecontextofthePerformanceSurvey2014.19TheamountoninvestmentsinnewinfrastructureforAustriaisnotincludedinsuchstatisticsasitisnotavailable(onlystatisticsoninvestmentsinnewandexisting

infrastructure as a whole is available).

Italy

France

PortugalPolandSlovenia

Austria



Figure 19 – Past investments for the improvement of existing motorways (e.g. 3rd or 4th lanes, etc.) in the last 10 years (millions €/year)*

* Source: Performance Survey 2014DataregardingAustriaarereportedinfigure18assumofpastinvestmentsinnewandexistingmotorways

1,400

1,200

1,000

800

600

400

200

0

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Intheperiod2004–2013,thetotalamountof in-vestments made by the sample of respondent ASE-CAPmembersfortheimprovementofexistingmo-torways was about 13,878 MEUR20. France is the country that invested more in the reference period: 8,730 MEUR as total amount invested in the refe-rence period.

Further, several countries planned future investments fortheimprovementoftheexistingmotorways:

• Poland planned investments for a total amount of about 210 MEUR for the period 2014–2026;

• Slovenia planned investments for a total amount of about 130 MEUR for the period 2014–2016;

•Portugal planned investments for a totalamount of about 60 MEUR by 2014.

Asanticipated,theconcessionsectorlargelycontri-butes to thenationalstatebudget,playingan im-portantroleastaxpayerbymeansofdifferentformsoftaxation:VAT,IncomeTax,eventualspecifictaxes(seeFigure20).

20TheamountoninvestmentsinexistinginfrastructureforAustriaisnotincludedinsuchstatisticsasitisnotavailable(onlystatisticsoninvestmentsinnewandexistinginfrastructureasawholeisavailable).

Italy

France

Portugal

PolandSlovenia



Figure 20 – Financial accounting (Concessionaire) – Yearly contribution to State budget by means of taxation (millions €/year)*

* Source: Performance Survey 2014

In Italy and France21, concessionaires yearly contri-bute to state budget bymeans of VAT for a totalamountofabout1,100and900MEUR.Withregardto income taxation, France yearly contributes with more than 1,000 MEUR paid while Spain contribu-tionaccountsforatotalamountequalto300MEUR.Lastly, in some cases, the national rules may fore-seespecifictaxesasinFrancewherein2012ato-tal amount of 765MEURwere paid (191.8MEUR

as Redevance Domaniale and 573.5 MEUR as Taxe d’aménagementduterritoire).

Concessionaires in Europe are also important in terms of number of direct employed operators (in-direct and induced employment is a further positive effect).Asamatteroffact,thesampleofrespondentASECAP members employ about 38,000 direct wor-kers(seeFigure21).

21FiguresforFranceareonlypartialasnotallcompaniesreportVATtoASFA.

VAT (million €/year) Income Tax (million €/year) SpecificTaxes(million€/year)expresseways

Austria Italy France Spain Poland Slovenia

1,500

1,000

500

0

338

155

1162

586

898

1054

765

399301

66 3 39591140 0



Figure 21 – No. of total direct employees*

* Source: Performance Survey 2014

Austria Italy France Spain Poland Slovenia Portugal

1.23 2.27 1.68 1.08 0.40 2.04 0.38Numberofemployees/lenghtof

20,000

15,000

10,000

5,000

0

2,667

13,190

15,188

3,671

1,165 1,237 1,127

In particular, France, Italy and Spain, the countries with the longest motorway network, reported thehighestnumberofemployees:respectively15,188,13,190and3,671.Itisworthnotingthatdifferencesin number of direct employees mainly depends on the fact that in some countries part of the activities is outsourced.

Inrelativeterms,Italyisthecountrywiththehighestnumber of employees per km of motorway network (2.27).

3.4 Conclusions

Toll road concession models in Europe foresee the obligation for the Concessionaire tomaintain andoperate the motorway network or section by means oftollchargedtotheusers.

Concession models can be clustered on the basis ofthenatureoftheconcessionnnaire;threedifferentconcession models have been detected:

• Concession to a private company: company owned exclusively by private investors;

• Concession to a public company: company owned by a government or other publicbodies;

• Concession to a mixed capital company: company in which the State acts as a partner of private capital.

In five countries (Austria, Denmark, Netherlands,Serbia and Slovenia) motorways (or toll infrastruc-tures)areexclusivelymanagedbytheStatethrough100% controlled companies. In Croatia, Italy and Portugal somemotorwaysareoperatedbymixedcapital companies, but only in Italy this is a com-mon practice (80% of the companies have mixed capital).

The period of a typical toll road concession (for construction and operation) normally last 30 years or more while the possibility to extent the conces-sion period (and the extension period itself) varies among ASECAP members: in certain cases thenationalprocurement rulesdonot foreseechangeofexistingcontractualclauses(e.g.inHungary),inother cases the extension is allowed only under cer-tainconditions(e.g.inGreecethereisthepossibilityfor a 3 year extension of the Concession Period in case the expected IRR is achieved).

As anticipated, the toll is a payment made by a user in return for using a specific infrastructure,



with reference to the construction, maintenance and operation of that infrastructure. Generally, toll rates were initially determined on the basis of the distance travelled and in order to cover the construction cost and the operating costs. Nowadays an increasingnumberofconcessionairesareexperiencingvariousformsofchargedifferentiation,mostofthembasedon the number of axles (as a proxy for road main-tenance needs), time of travel (in order to monitor airandnoisepollutionandreducecongestionduringpeak hour) and emission Euro standard (in order to reduce air pollution).

Three out of sixteen ASECAP members (Austria, CroatiaandSlovenia)differentiatetheroadchargesaccordingtotheEuroemissionclassofthevehicle,to time of travel and to number of axles. All ASE-CAPmembers,with theexceptionofHungaryandNorway,whichdonotapplyanyformofchargediffe-rentiation,differentiatetheroadchargingonlyonthebasisofthenumberofaxles.Chargedifferentiationbased on time of travel is applied only on specificinfrastructures (selected road or tunnel) in Austria, France, Ireland, Slovenia, Spain and UK.

The results of the Performance Analysis carried out inthecontextoftheStudyshowhow,altoughthereisnouniquemodelofroadtollconcession,excellentresults are achieved when models may be adapted to peculiarities of specificmarkets. As amatter offact, in the last ten years, concession models in ASE-CAP members have contributed to the development ofalargepartoftheEuropeanmotorwaynetwork.

AmongASECAPmembers,France,Italy,Spain,Por-tugalandAustriaarethecountrieswiththelongestconcessed network (they collect 77% of the total ASECAP network).

Further, concession models applied in ASECAP membersachievedrelevantresultsintermsoftrafficvolumes. In particular, the countrywith the highestaverage daily traffic (ADT) in 2013 was the UnitedKingdom(about40,000veh.), followedby ItalyandAustria. Considering the number of vehicles - km,countries with highest levels are France and Ita-ly (more than 75 bn of veh. -km per year). All other countries register less than 30 bn of vehicles-kmperyear.Ingeneral,trafficalongmotorwaynetworkmanagedbyASECAPmembers, as for the rest ofthemotorwaynetworkisstronglyinfluencedbyeco-nomic trend. In the last three years, many ASECAP members have, in fact, experienced a certain reduc-tionoftraffic,neverthelesstheycontinueprovidinganexcellentservicetothemobilityofthecitizens.

Lastly, it is worth noting that the road concessionmodels have relevant socio economic impacts on thedevelopmentof regionaleconomies in termsofdirect users benefits (e.g. travel time savings androad network safety improvements in terms of reduc-tion of risks of accidents and casualties) and of socio economicspillovers(accessibility,employment,effi-ciency in production and distribution activities, social inclusion of remote areas, and contribution to state budgetbymeansoftaxation). Inparticular,withre-gardtosafety,concessionmodelsmakeconsistentand continuous investments over time in research anddevelopmentonnewandmoreefficienttechno-logicalsystemsaimedto improvesafety levels.Theeffortsmadeinsafetyinthepastandatpresentge-neratedsignificant improvementswithregardtothereduction of fatality rate in particular in Austria, Spain, Italy and France. In addition, recent studies22confi-med that motorways are safer than other roads in terms both of accident and fatality rates.

22Inparticular,seethereport ‘Asvantagensdeviajaremautoestradas’ (‘Theadvantagesof travellingonmotorways’) (June2013)ofAPCAP(thePortuguesemotorway association).


4 Issues and Risks

4 Issues and Risks

Nowadays,manyfactorsareendangeringacorrectapplication of the road concession tool, thus de-privingcountriesofavaluableasset, inamomentinwhich growth and developmentwould stronglyneed it. The risk allocation between the two key actors of a typical concession model, namely the Concession Authority and the Concessionaire, is crucial and should follow the standard advice that «the party best able to shoulder the risk should continue to bear it».

In general, the risk allocation scheme is providedbythenationallegislation,asitisthelegalbasisofconcessioncontracts.Theheterogeneityofnationallegislationsisreflectedondifferentiatedriskalloca-tion schemes of concession contracts (see para-graph4.1).

There are several events likely to affect the initialrisk allocation and, in certain cases, even cau-singachangeof thecontractualclausesbetweenConcession Authority and Concessionaire (see pa-ragraph4.2).

The social acceptability of toll systems is another major issue likelyto influencethe initialriskalloca-tion and must be examined with care in any case where an infrastructure is to be placed under toll (seeparagraph4.3).

Lastly, during the concession period, some ASE-CAP members (Italy, France and Spain) experienced casesofevolutionsand/ordivergencesintheinter-pretations of contractual clauses occurred over time (seeparagraph4.4).

4.1 Risk allocation between Concession Authority and Concessionaire

Ingeneral,theriskallocationstructureisclearlyiden-tifiedbythenationroadadministrationandisacru-cialpartoftheconcessionagreement.However,theactualrisksharingamongConcessionAuthorityandConcessionairevariessignificantlyfromonecountrytoanother.Typically, theconcessionagreements inforce regulate four categories of risk: political andlegal risks, economic and financial risks, technicalrisks (i.e. construction-related risks) and further risks (i.e. commercial risks and operational risks)23.

4.1.1 Political and legal risks

Politicalandlegalrisks,suchasnatural phenome-na, force majeure, war or civil disturbance, legis-lative changes and changes in government poli-cy are allocated between the Concession Authority and the Concessionaire in the European countries in differentways(seefigurebelow).

23ThischapterreportstheanalysisonriskallocationforthoseASECAPmemberswhichprovidedthequestionnairefilledinthecontextofthePerformanceSurvey2014.


4 Issues and Risks

Thepolitical and legal risks aregenerally bornebythe Concession Authority in France, Greece, Spain, Italy and Poland; while in Austria and Slovenia are

Figure 22 – Political and legal risks


24 In these two countries the Concessionaire is 100% owned by the Concession Authority.

FRANCE

Concession Authority Concessionaire• Force majeure• War or civil

disturbance• Legislative changes• Changes in government policy

• Natural phenomena

POLAND

Concession Authority Concessionaire• Natural phenomena• Force majeure• War or civildisturbance• Legislative changes• Changes ingovernment policy


ITALY

Concession Authority Concessionaire• Natural phenomena• Force majeure• War or civil

disturbance• Legislative changes• Changes in

government policy

AUSTRIA



government policy

SLOVENIA

Concession Authority Concessionaire• War or civildisturbance

• Natural phenomena• Force majeure• Legislative changes• Changes in

government policy

SPAIN



government policy

HUNGARY



government policy

• Natural phenomena• Force majeure• War or civil


government policy

PORTUGAL



government policy

• Natural phenomena• War or civil


government policy

GREECE



government policy


generally borne by theConcessionaire24. In Portu-galandHungary,theConcessionAuthorityandtheConcessionairesharethepoliticalandlegalrisks.


4 Issues and Risks

4.1.2 Economic and financial risks

Theeconomicandfinancialriskssuchasuncertain-tiesconcerningeconomicgrowth,inflationrates,convertibility of currencies and exchange rates, difficultaccesstothefinancialmarketare allocated between the Concession Authority and the Conces-

sionaire in the European countries in different ways(seefigurebelow).

TheeconomicandfinancialrisksaregenerallybornebytheConcessionaireinallinvestigatedcountries.

Figure 23 – Economic and financial risks


FRANCE

Concession Authority Concessionaire• Uncertainties

concerning economic growth

• Inflation rates• Convertibility of

currencies and exchange rates

• Difficult access to the financial market

POLAND






ITALY

Concession Authority Concessionaire• Inflation rates • Uncertainties





AUSTRIA






SLOVENIA

Concession Authority Concessionaire• Difficult access to

the financial market• Uncertainties




SPAIN

Concession Authority Concessionaire• Convertibility of


• Uncertainties concerning economic growth

• Inflation rates• Difficult access to

the financial market

HUNGARY






PORTUGAL






GREECE


concerning econo-mic growth





4 Issues and Risks

4.1.3 Technical risks: construction-related risks

The technical risks such as completion of the work, quality of the work, completion dates, cost of postponement andmodification of theproject are allocated between the Concession Authority and the Concessionaire in the European countriesindifferentways(seefigurebelow).

Figure 24 – Technical risks: construction-related risks

The technical risks are generally borne by theConcessionaire in Spain, Austria, Poland, Slovenia, Greece,HungaryandPortugal;whileinFranceandItaly such risks are distributed between the Conces-sion Authority and the Concessionaire.


FRANCE

Concession Authority Concessionaire• Completion of the

work• Cost of

postponement and modification of the project

• Completion of the work

• Quality of the work• Completion dates

POLAND


work• Quality of the work• Completion dates• Cost of


ITALY

Concession Authority Concessionaire• Completion dates• Cost of



• Quality of the work• Completion dates• Cost of


AUSTRIA




SLOVENIA




SPAIN

Concession Authority Concessionaire• Cost of postponement and modification of the project



HUNGARY

Concession Authority Concessionaire• Cost of





PORTUGAL

Concession Authority Concessionaire• Cost ofpostponement andmodification of theproject




GREECE

Concession Authority Concessionaire• Cost of


• C ompletion of the work



4 Issues and Risks

4.1.4 Further risks

Further risks such as increase of tax share on tolls, commercial risks (e.g. traffic decreases),operational risks(e.g.interruptionoflanesduetoaccidents) are allocated between the Concession Authority and the Concessionaire in the European countriesindifferentways(seefigurebelow).

Figure 25 – Further risks


FRANCE

Concession Authority Concessionaire• Increase of tax share

on tolls• Commercial risks• Operational risks

POLAND



ITALY



AUSTRIA



SLOVENIA



SPAIN



HUNGARY

Concession Authority Concessionaire• Commercial risks • Increase of tax share

on tolls• Operational risks

PORTUGAL



GREECE



Further risks such as increase of tax share on tolls, commercialrisksandoperationalrisksaregenerallyborne by the Concessionaire in Italy, Austria and Po-land;whileinFrance,Spain,Greece,Portugal,Slove-niaandHungarysuchrisksaredistributedbetweenthe Concession Authority and the Concessionaire.


4 Issues and Risks

4.2 Unforeseen events affecting risk allocation25

Despite clear risk allocation schemes between the Concession Authority and the Concessionaire de-fined in the concession contracts (on the basis ofthe specific national legislation in force), ASECAPmembers reported unforeseen events that, over time,affectedtheinitialriskallocationscheme.In particular, ASECAP members report issues related to expropriation activities, unforeseen construction costs inducedby legislationevolutions,changes infiscal environment, unforeseeable trafficdecreases,parallelfreeroadsdrainingtrafficfromtollmotorway,and ill‐adapted speed regulations deteriorating thelevelofserviceandadditionaltaxes/chargesnotre-lated to motorway operations.

4.2.1 Issues concerning expropriation activities

Some ASECAP members reported cases in which unforeseen events related to expropriation activities (e.g. delays and extra costs) caused issues to theconcession scheme. In some cases, Concession Au-thorities faced the issueschanging the initial alloca-tion schemes, elsewhere the issue was entirely faced unilaterally (by one contractual party) without chan-gingtheinitialclausesofthecontract.FourASECAPmembers reported the problem, in particular:

• in Franceitcausednochangeinriskallocationscheme.

• in Greece investigation due to archeologicalfindings caused delay on the timetable. Theextra costs occurred for this incident were co-veredbythePublicauthority,butnochangeinthe contractual risk allocation were made;

• in Spain the increase of the cost of expropria-tion is took on board by the Concessionaire. In the concrete case of the Concessionaire that went bankruptcy, the State, as owner of the road,isforcedtopaytheextracostoccurringfor the expropriation land.


Issue concerning expropriation activities

n Event occuredn Event not occured

4.2.2 Construction extra- costs induced by legislation evolutions

Some ASECAP members reported cases in which externallegislationevolutions(e.g.additionalenviron-mentalobligations)causedissuetotheconcessionschemesintermofextra-costsduringtheconstruc-tion phase. In some cases, Concession Authori-ties faced the issues changing the initial allocationschemes(e.g.givingcompensations,extendingtheconcessionperiodor allowing for a tariff increase);elsewhere the issue was entirely faced unilaterally (byonecontractualparty)withoutchangingthe ini-tial clauses of the contract. Six ASECAP members reportedthe issuecausedby legislationevolutions,in particular:

• in Austria additional environmental obliga-tions caused delays in the approval proce-dures and extra-costs borne mainly by the Concessionaire;

• in France it caused delays for completion of the work, increase of construction costs, changes to the contract and partial fundingfrom the State;


4 Issues and Risks

• in Greece it caused extra-costs paid by the Publicauthoritywithnochangeinthecontrac-tual risk allocation;

• in Portugal construction extra-costs occurred on thewholemotorwaynetworksince1990and some compensations were received;

• in Spain the construction extra-costs, in some cases have been compensated with an extensionperiodoranincreaseinthetolltariffinorder to keep the financial balanceof theconcession.

Construction extra-costs induced by legislation evolutions


4.2.3 Changes in fiscal environment

Some ASECAP members reported cases in which changes in fiscal environment (e.g. VAT increase)caused issues to the concession schemes in force. Insomecases,thechangeswerefullyfacedbytheConcessionairewithnochangeson the initial riskallocation,inothercasessuchchangeswerereflec-tedinthetollschargedtotheusers.FourASECAPmembersreportedtheissueinducedbylegislationevolutions occurred, in particular:

• in Francechangeinfiscallegislationoccurredbetween2009-2013butnochangeinriskal-location scheme were reported;

• in Greece a change in fiscal environmentcausedtrafficdecreasewhichinturncauseddraw stop from the banks. A negotiationstarted in order to face the problem, and as a result,severalagreementsoncertaincontracttermstomitigatethefiscalandeconomicen-vironment were made;

• in Poland changes in fiscal environmentcaused a considerable VAT increase on toll collection along the whole network, but nochangeinriskallocationscheme;

• in Portugalchangesinfiscalenvironment(in-crease of VAT) occurred in 2005 and in 2011, and were fully reflected in the tolls chargedwithnochangeinriskallocation.

Changeinfiscalenvironment



4 Issues and Risks

4.2.4 Traffic decreases

Some ASECAP members reported cases in which traf-ficdecreasecausedissuetotheconcessionschemes.In some cases, the Concessionaire reported losses of revenuebut no change in risk allocation scheme,elsewhere the Concession Authority provided com-pensation. Seven ASECAP members reported issues inducedbytrafficdecreases,inparticular:

Trafficdecreases


• in Austria, Italy, France and Portugal it caused a reduction of the expected revenues. In particular in Austria, as a consequence ofthe drop of revenues, the construction pro-gramofASFINAGwasadjusted;

• in Greecetrafficdecreasescauseddrawstopfromthebanks.Anegotiationstartedinorderto solve the problem, and as a result agree-mentsoncertaincontracttermstomitigatethefiscalandeconomicenvironmentweremade;

• in Polandafterachangeoflawbywithdrawalofthevignettesystem,trafficofheavyvehiclesdeclined by almost 40%. No change in riskallocation scheme;

• in Spainan instrumentcalledtrafficcompen-sation account has been created in order to supporttheConcessionaireexperiencingtraf-fic lower than 80% of what initially foreseen.Nevertheless, this instrument was only used one year and the risk is still fully supported by concessionaires.

4.2.5 Parallel free roads draining traffic from toll motorway

In some countries the Administration decides to build or improve parallel expressways to the exis-ting toll motorways. These parallel roads are freeofchargeandprofitofthesamequalitystandardsthan the toll motorways. This initiative does not respondtoademandoftrafficormobility,whichisalreadycoveredwiththeexistingtollmotorway,butto others interests which are not strictly economic or social.

Oncethetollconcessioncontractwillbefinalized,the Administration, which is the owner of both in-frastructures, will have to take the responsibility of managingandmaintainingboth roads.Thisdupli-cityisunnecessaryanditchargesanextracosttotaxpayer and additional risk for the Concessionaire whose contract shall be reviewed. In particular:

• In Spain,30%ofthetollnetworkisbeingaffec-ted by this phenomenon. In this case, the two mainAdministrationlevels(StateandRegions)created the duplication of road infrastructure alongthesamecorridorwhichresultedinim-balancesoverexistingtollroads(i.e.privatelymanagedbutownedbythesamepublicAd-ministrationspromotingtheparallelnetworks)as well as a problem of overcapacity in these corridors.

Parallelfreeroadsdrainingtrafficfromallmotorway



4 Issues and Risks

4.2.6 Ill-adapted speed regulations deteriorating the level of service

The issuanceof ill‐adapted speed regulations oc-curred in Austria with no impact on the level of ser-vice of the motorway network.

Ill-adapted speed regulations deteriotating the level of service


InAustria,duringthenight,thespeedlimitfortruc-ks was reduced to 60 km/h. It did not have an im-pactontheutilizationoftheroadsections.Further,more and more sections were limited to 100 km/h for passenger cars to improve air quality,with noimpactonusage.

4.2.7 Additional taxes/charges not related to motorway operations

Some ASECAP members reported cases in which additional taxes/charges not related to motorwayoperations caused complaints by users, as they werereflectedinanincreaseoftollchargedtothem.Two ASECAP members reported issues induced by additional taxes/charges not related to motorwayoperations, in particular:

• in Austria, the introduction of a mark-up for crossfinancingofrailwaytunnelsforthetrucktolling tariffs caused complaints by haulierassociations26;

• in France, it caused a protest on toll level: bad public image hindering negotiation processwith the State.

Ill-adapted speed regulations deteriotating the level of service


26Fortrucksatrafficbanontheparallelroadexists.


4 Issues and Risks

4.3 Aspects affecting social acceptability of toll systems

The social acceptability of toll systems represents a critical issue of the current concessions in force, dependingmainlyoncertain factors suchas levelandincreaseovertimeoftollcharges,tollcollectionmethod, presence of alternative road with respect to a tolled road section, existence of taxes on road sector.

Figure26reportstheresultsofthePerformanceSur-veywithregardtothelevelofsocialacceptabilityre-gisteredineachASECAPmember.

Ascanbeinferredbytheabovefigure,thelevelandincreaseoftollchargesrepresentthemostcriticalas-pectsaffectingthesocialacceptabilityofatollsystem.

Figure 26 – Aspects affecting social acceptability of toll systems

Scaleof0to5,with0beingpoorlevelofimpactand5beingveryhighlevelofimpactSource: Performance Survey 2014

FRANCE

Existence of taxes on road sector

No alternative to a tolled road section

Toll collection methods

Increase of toll charges

Level of toll charges

0

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PORTUGAL






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0

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CZECH REPUBLIC






0

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4 Issues and Risks

4.4 Cases of evolutions/divergences in the interpretation of the contracts

Italy, France and Spain experienced cases of evo-lutionsand/ordivergences inthe interpretationsofclauses included in the initial concession contracts.

4.4.1 Italy

InItalycasesofdivergentinterpretationofcontractclauses defining rules for managing the transitionperiodtilltheawardingoftheconcessiontoanewcompany occurred.Both case studies reported below refer to Au-tostrade Centro Padane, Concessionaire for the construction and management of motorway A21Piacenza-Cremona-BresciaandtheroadsectiontoFiorenzuolad’Arda(PC)since1973. 4.4.1.1 Case Study 1 – Compensation for

assets not fully amortised by the outgoing Concessionaire

The original agreement between AutostradeCentro Padane (the Concessionaire) and ANAS (the Concession Authority) has been subject to va-riousamendmentsandintegrationsuntilthesingleagreementinNovember2007.ThedeadlineoftheconcessionwassetbytheagreementinSeptember2011.

Following theextinctionof theconcession,howe-ver, the continued management of the motorwaysection became necessary, awaiting the selectionof a new Concessionaire.

Therefore,onAugust2012anadditional legal acttotheagreementbetweenANASandtheoutgoingConcessionairewasconcludedtoregulatethecoo-peration between the Concession Authority and the outgoingConcessionairewaitingforthetakeoverbythesucceedingConcessionaire.

TheadditionallegalactwasenvisagingthatANAS(theConcessionAuthority)orsucceedingConces-sionaire has to pay Autostrade Centro Padane a compensationequaltotheamountofreversibleas-

setsgenerateduntilthatmomentandnotyetamor-tised,asresultsfromthefinancialstatementfortheyear in which the license ends.

To date, however:

• the call for tenders to select the new Conces-sionaire has not been concluded yet;

• no compensation has been paid to Autostrade CentropadanebythesucceedingConcessio-naire (considering that the tender is still farfrombeingawarded)norby theConcessionAuthoritydespitethevariousrequests;reasonforwhichtheConcessionairehadtoengageinalegaldisputeinordertoobtaintheabovementioned compensation.

In addition, in order to make the necessary invest-ments, the Concessionaire had to take out bank loans, which have to be repaid by October 2014. To guaranteetheloansrepayment,apledgehasbeenset out in accordancewith the agreement,whichhas been regularly accepted by the ConcessionAuthority.

TheeventsdescribedimplyasignificantimpactonAutostrade Centro Padane, which has to return the fundsreceivedintheformofloanswithoutbenefit-tingfromthecompensationenvisagedbytheactswhich, to date, has not been provided.

4.4.1.2 Case Study 2 – Managing the motorway during the transition period

Oneclauseof theagreementbetweenANASandAutostrade Centro Padane envisaged the obliga-tionfortheoutgoingConcessionairetocontinueinmanagingthemotorwayandrelatedcommitmentsuntil the transfer of the same, that takes place when thesucceedingConcessionaireprovidestherelatedcompensation.

Another clause foresaw that in case the new Concessionaire would not succeed within twenty-


4 Issues and Risks

four months from the time limit of the concession agreement,evenbypayinginadvancethepossiblecompensation, the Concession Authority would pro-vide for the succeeding, after having provided theeventual compensation in favour of the outgoingConcessionaire.

Once the concession expired, ANAS (the Conces-sion Authority) asked Autostrade Centro Padane (the outgoingConcessionaire)tocontinueinthemanage-ment as if the licence was still valid, therefore conti-nuinginmakinginvestments.

The outgoing Concessionaire, as a precautionarymeasure,contestedtheprovisionnotingthat(i)itwasonlyinchargeofmanagingthemotorwaysection(ii)itwasnotboundtocontinueinmakinginvestments.

The administrative court sustained the complaint by the Concessionaire and, thus, suspended the duty to continueinmakinginvestments.

This decision allowed for the conclusion of an addi-tionalacttotheagreementonthebasisofaBusinessPlan that does not include investments, a condition requiredbybanks inordertoprovidefunding infa-vour of the licensee company.

4.4.2 France

InFrancethenegotiationsaroundthecontractrepre-sent one of the most sensitive topics in a concession framework.

4.4.2.1 Case Study 1 – Raise of one dedicated tax supported by the Concessionaires: the “Redevance domaniale”

The principle of the Redevance domaniale is that Concessionaires are occupying public grounds torun their business and should pay a fee for that, re-gardlessofthefactthattheyweretheoneswhopaidtoacquirethelandandbuildtheinfrastructure.Theideaisthattheacquisitionprocesswasmadepos-sibleonlybyconferringState-likepowerstoConces-sionaires, not ordinarily available to private compa-nies,makingthemliableforthatadvantage.

The tax was calculated as the addition of two terms, one based on revenues and the other on an esti-mated rental value of the land occupied. Both terms areevolvingintime,revenuesthroughtariffandtrafficandrentalvaluesbeing indexedyearly.Theamountofthetaxwasthereforesteadilyincreasing.

Early2013,thegovernmenttookthedecisiontoree-valuateunilaterally thevalueof that tax, introducinga new formula that would double the amount paid by the Concessionaires. No justification was givenonhowanyevolutionof thevalueofpublicgroundoccupationwouldhave justified that increase. Thatdecision was blocked by a jurisdiction, the Conseil d’Etat,whichhadtobeconsultedbythegovernmentpriortotheintroductionofthemodification.

Thegovernmentmodifiedthedecree,changingtheformulatotargetanincreaseofonly50%.Consultedagain,theConseil d’Etat declared that the new de-creewasnotillegal.

As soon as the decree was officially published, allConcessionaires, with the support of ASFA, went to Court to ask for a cancellation of the decree. That Court was the Conseil d’Etat again, although in adifferentconfiguration.

TheConseild’Etatswiftlygaveitsjudgment,refusingto cancel the decree, although no real justificationwasgiven.However, in itsdecision, italsoincludeda provision saying that Concessionaires should beauthorizedtobecompensatedifneeded,duetothestrictregulationoftariffs,whichleftthemnofreedomto manage their revenues. This provision was keybecause government had previously started to as-sertthatnocompensationshouldbegranted,accor-dingly toanothermisinterpretationofarticlesof thecontractprotectingtheConcessionairesagainsttheconsequences of a raise in any specific taxes anddutiesaffectingtheirbusiness.

ThetaxincreaseiseffectivesinceJuly2013andfirstpaymentshavebeenproceededaccordinglybytheConcessionaires.Compensation is still pending, al-thoughitsprinciplehasbeenacceptedbytheState.


4 Issues and Risks

4.4.3 Spain

In Spain, external events such as unforeseen ex-propriation land and construction extra-costs, traffic decreases and development of parallel ex-pressways caused claims by the Concessionaires and the need for a review of the initial concession agreementclauses.

4.4.3.1 Case Study 1 – Compensations for economic rebalance

In Spain, some toll motorways recently awarded suf-fereddifferentunexpectedsituationssuchas:

• increase of the expropriation land costs: courts have recognized prices 8 times higher thantheonesforeseenbytheawardingauthority;

• increase of the construction costs: toll com-panies had to assume additional construction costsnotincludedintheoriginalcontract;

• importanttrafficdecreases.

Asaconsequence,thesetollsmotorwayswerenotable to face the payments and start bankruptcy proceedings.

TheGovernmentapprovedtwolaws,Law26/2009andLaw43/2010,wheredifferentmeasuresweredefined in order to help the Concessionaires toreestablish their economic situations.

These measures were the creation of a compensa-tionaccount forthetrafficbelow80%andpartici-pative loans for facingexpropriation landpaymentfor the amount up to 175% of the estimated price. Duringacertainperiod,theawardingauthoritywillhavetoallocateeveryyearagivenamountofmo-ney to these two concepts. All these money and measures would have been paid back to the admi-nistrationoncethetrafficlevelswillberecovered.

Ontopof that,Law26/2009recognizedthepos-sibility of defining additionalmeasures in order toreestablish the economic and financial balance ofthe concessions.

Despitewhatitwasrecognizedbylaw:

• the compensation account was only imple-mentedthefirstyears(whileitwasforeseentobe implemented annually up to 2021);

• participative loans were also partially implemented;

• no additional measures were applied;• most of these contracts have not been

rebalanced.

4.4.3.2 Case Study 2 – Construction of parallel expressways

In Spain, some toll motorways had suffered theconstruction of a parallel expressway or the impro-vement of a parallel road in the same corridor. The construction of these expressways was not fore-seen and was not included in the road plans/sche-meswhenthemotorwaysweregranted.

The Government interpreted that when the construction of a parallel road is made by a public authority(regional)whichisdifferenttotheonewhohas been awarded the motorway (State), then, it is legal. Italsounderstandsthatthefactofhavingawarded a motorway does not prevent the public authority to make additional works in parallel roads when it is for public interest reasons.

4.5 Conclusions

The allocation of risks between the Concession Authority and the Concessionaire represents a cru-cial aspect of a concession contract.Ingeneral,theriskallocationschemeisclearlyidentifiedbythenationallegislationinforceasitisthemostrelevantcomponent of a concession contract. As a conse-quenceofheterogynouslegislativeframeworks,theriskallocationamongASECAPmembers’contractsvariessignificantlyfromonecountrytoanother.

Not all risks are the same and thus are not borne by the same entity. Typically, aspecificriskshouldbeborne by the entity best suited to do soasbeing


4 Issues and Risks

inpossessionofanadequatefinancial structure toreduce the associated costs. However, the initial and overtimeriskallocationgeneratesmanyissuesasitisnotalwayseasytodefinetowhatextentasubjectisabletocontrolthespecificrisk.

Itshouldbeconsideredasageneralprinciple,eitherinconcessionlegislativeframeworkoratleastinthecontract itself, that any unforeseen risk or force ma-jeureeventshouldlegitimateacontractrevisionthatcouldleadtorebalancethecontractandguaranteeitslong-termfulfillment.

Asfarasthepoliticalandlegalrisksareconcerned,such risks tend to be borne by the Concession Au-thority (only in Austria and Slovenia, where they are 100% owned by the Concession Authority, such risks are borne by the Concessionaire). The eco-nomicandfinancialrisksaregenerallybornebytheConcessionaire. With regard to the technical risks(risks related to the construction activities), such risks tend to be borne by the Concessionaire, with some exemptions in France and Italy where such risks are distributed between the Concession Autho-rity and the Concessionaire. Further risks such as the increase of tax share on tolls, commercial risks and operationalrisksaregenerallybornebytheConces-sionaire in Italy, Austria and Poland; while in other countries are distributed between the Concession Authority and the Concessionaire.

The ASECAP members reported several cases of occurred unforeseen events such as issues concer-ning expropriation activities, construction extra‐costsinducedbylegislationevolutionsandchangesin fiscal environment and traffic decreases. Suchevents caused impacts on risk allocation schemes in terms for instance of compensations received by the Concessionaire or review of the contractual terms regarding period extension or toll tariff increase. Insome countries external events, such as the deve-lopmentofparallelfreeroadsdrainingtrafficfromtollmotorway, the issuanceof ill-adapted speed regu-lationdeterioratingthelevelofservicealongthetollmotorway and the introduction of additional taxes/chargesnotrelatedtomotorwayoperations,actually

occurred,ingeneralwithnorelevantimpactonroadtoll contract conditions.

The social acceptability of the toll systems repre-sents a relevant concern both for the Concession Authority and for the Concessionaire itself. The ASE-CAP members reported the level and the increase of tollchargesasthemostcriticalaspectsaffectingthesocial acceptability of the toll systems.

Casesofevolutionanddivergencesintheinterpre-tation of the contracts occurred over time in several European countries. In particular, in Italy, France and Spaindivergencesintheinterpretationoftheconces-sioncontractshavecauseddifferenteffectssuchascontroversial during the transition period betweenthe outgoing Concessionaire and the ConcessionAuthorityoncompensationfornotfullyamortizedas-setsandoninvestmentobligationsaftertheexpiryoftheconcession(inItaly);changesofthefiscalpolicyapplied in the road sector (in France); and compen-sationsbythegovernmentforguaranteeingtheeco-nomic rebalance of the Concessionaire (in Spain).


5 Forms of funding

5 Forms of funding

InallEuropeancountriesthereisageneralneedtofind new financial resources for the construction,operationandmaintenanceofnewhighwaysections.Nowadays,theforecastedtrafficonthesectionstobebuilt is significantly lower than the consolidatedtrafficontheformerexistingsections.Consequently,thefinancialviabilityofnewprojectsrequiresasignifi-cantfinancialsupportfromtheState,andtheamountofsubsidiesrequestedbythecandidatesintheirpro-posal has become a major criterion of selection.

5.1 Alternative forms of road tolling

The European experiences in road charging showthreemainmechanismsforobtainingrevenues:

1. Direct road tolling: the public authority dele-gates theconstruction, fundingandmanage-mentofaroadtoamanagingcompany.Thecompany collects tolls from the users (dis-tance-based charge) to pay back the invest-ment and to cover maintenance costs (see also paragraph5.1.1).

2. Indirect road tolling: the public authority dele-gates theconstruction, fundingandmanage-mentofaroadtoamanagingcompany.Userspay a toll to the public authority, usually on the basisofa“vignette”(time-basedcharge).Theoperator is remunerated by the public authority, typically on the basis of availability payments (seealsoparagraph5.1.2).

3. Shadow toll system: the public authority dele-gates theconstruction, fundingandmanage-mentofaroadtoamanagingcompany.Thecompany collects no toll from the users, for whom the infrastructure is free (see also para-graph5.1.3).

5.1.1 Direct TollingOverthepastdecade,duetoresourcesshortage,Governments have sought alternativemethods offinancingtransportimprovementswithoutaffectingtheirfiscalsituation.Chargingtolls,too,hasbeco-meanattractiveoption formanaging trafficon in-creasinglycongestedroads.

While pursuing a road tolling policy, it is vital thatthe government understands its objectives sincethese objectives will shape all activities undertaken, bothintheearlyyearsandduringtheoperationoftheroadasregulatoryquestionsarise.Directtollingsystemsaregenerallyappliedintheroadtransportsectorinordertoreachoneormoreofthefollowingobjectives:

• Tolls as new, stable and dedicated source of finance:

Toll revenues represent a new source of reve-nue, in a context in which road has previously been supported out of the general Govern-ment revenues. Tolls provide anongoing re-venue source, which is not tied to the annual Governmentbudgetaryprocess.Tollrevenuescan be dedicated to the support of construc-tion and maintenance for a particular road the-rebyensuringthatmaintenancefundsinparti-culardonotcompetewiththerequirementsofother roads in the network.

• Tolls as tool for addressing user pay principle and internalizing of externalities: Toll systems are crucial for a sustainable transport policy aimedatincreasingtheextentof«userelatedpayment»andinternalizethenegativeeffectsofroadusage.


5 Forms of funding

5 Forms of funding • Tolls as tool for developing road infrastructure in less developed regions:

Some countries have introduced tolls on one road in order to support the development of infrastructure networks in less developed re-gions. Such schemes can help to transferwealthfromoneregionofacountrytoanother.

• Tolls as tool for developing the Private Sector: SomeGovernmentshavesoughtprivatesec-tor participation in roads where they wanted to develop the road network, and to develop the private sector within their economy at the same time. In addition the involvement of the privatesectorcanallowthegovernmenttofi-nanceatleastpartoftheroaddevelopmentoffbalance sheet.

Typically tolls varywithdistance traveledalong theroadandaccording to thenumberofaxleson thevehicle.Thisapproachwasfirstadoptedbecauseitcan act as a proxy for the road space used by the vehicleandthedamagethatthevehicleinflictsontheroad pavement. However other options (which can be combined) include variation by time of day or by day of week, variation due to cost of road construc-tionorroadmaintenance,congestionrelatedtollingandloyaltyprograms/discountsforfrequentusersorlocal residents.

As far as the different technologies for tolling areconcerned, two basic options are available:

•Manual tolling: themost commonmethod isstill manual. The drawbacks are that it is a slow systemand therefore requiresmore toll boo-ths/lanes than any other to achieve the same traffic flow.Set up costsmay also be high ifland acquisition is costly. The possible pay-ment mechanisms comprise cash and credit card.

•(Smart) Electronic tolling: electronic systemsrequirealluserstocarrytags intheirvehiclesandtopassthetollgatesataslowspeed,butwithoutstopping.Therehasbeensomeoppo-sitionstoelectronictollingbecauseofthelevelof information which it allows road operators to collect about individual users movements. Other drawbacks for the system are: the re-

quirement toaccurately recordscarowners’addresses whichmight not be always avai-lable; the compatibility between differentsystems where there are several toll road operators each with different electronic tollcollectionequipment.Thislatteronehowever,could be prevented by Governments by care-fullystructuringagreementsorwithlegislativecontrol(seealsoparagraph3.3.1.1).

Lastly,mixedtollingsystems(manualandelectronictolling)arealsocommon.

5.1.2 Indirect Tolling

Inchargingsystemsbasedon indirect roadtollingthe public authority delegates the construction,fundingandmanagementofaroadtoamanagingcompany. Users pay a toll to the public authority, usually on the basis of a “vignette” (time-basedcharge).Themanagingcompanyisremuneratedbythe public authority, typically on the basis of availa-bilitypayments(seeparagraph5.1.2.1).

Further, some ASECAP member successfully expe-rienced new contractual tools such as Adossement (seeparagraph5.1.2.2),whichforeseestheindirectfinancingofnewroadinfrastructures.

5.1.2.1 Availability payments

In the context of the availability payment conces-sions,theConcessionAuthoritybornetheproject’srevenue risk. The Concession Authority pledgesavailability payments to compensate the Conces-sionaireforitsroleindesigning,constructing,ope-rating,andmaintainingthefacilityforasettimepe-riodduringwhichitreceivesaforeseeableandfixedset of income. Availability payments are often used for projects that are not tolled or for which project revenues are not expected to cover debt service costs.

In Hungary, after an initial use of tolling sche-mes, from 2004 the development of motorway network has been supported by availability pay-ment systems.


5 Forms of funding

The characteristics of the Payment Mechanism in Hungaryarethefollowing:

•revenues from vignette are collected by theState;

• monthly availability fee to be paid to the Concessionaire with possible deduction of:- temporary unavailability,- safety related problems,- failuretomeetoperationalrequirements;

• further payments can be made:- linked to the volume of heavy goods

vehicles (HGV),•payments being indexed to inflation and ex-changerate.

The table below provides a comparison between theoriginalconcessionstructurebasedontollroadschemeandtheconcessionstructurerenegotiatedin 2004 based on availability payment scheme.

Table 7 –M5 Motorway: from tolling to availability payments

Original concession structure (1994) Renegotiated concession structure (2004)

Type of concession BOTconcessionfor57kmmotorway(includingexisting27km and 30 km half-motorway section)

BOT concession for M5 motorway including a 47 kmextension

Concession period 35 years 35 years

Structure Toll road (Toll: €0.07/km/car) Availability payment scheme

Concessionaire Privateconsortium(incl.Bouygues,Strabag) 40%governmentstakeinconsortiumwithprivatepartners

Trafficlevels 35-40% below projections Significantincrease

Government support •Minimumrevenueguaranteethroughstand-byoperationalsubsidyfromRoadFundincaseoftrafficshortfall

•Subsidy amounts cappedona six-monthlybasis for firstsix years

• Dividends to be paid into Road Fund•Government in-kind and financial contribution = 45% of

total cost

• Annual availability payment of €80 million •Monthly performancepayments based on average cove-rageratiosandagreedreturn

• In case of non-performance, deductions from payments based on penalty point system

Total project cost €370 million €919million

Financial structure Debt/equity:80/20%SyndicatedbankloanofECU204mil-lionwithEBRDguarantees

Debt/equity: 82%/18% €750 million syndicated bank loan20-yearmaturityPricing:LIBOR+120-160bps

Other Strongpublicresistanceagainsthightolllevels Highly successful refinancing and syndication to 24 banks(incl. EBRD)

Source: Public-Private Partnerships: Lessons from the Roads Sector- World Bank

Lessons learnt•Some forms of government support is re-quiredtoattractsustainableprivatefinance.

•Tollroadsareriskyinalowtrafficanduntestedpolicy environment.

• Availability payment schemes reduce traf-fic/revenue risk and increase access to pri-vate finance due to security of cash flowsand increased creditworthiness of the Concessionaire.

5.1.2.2 Adossement System

The Adossement System is a contractual tool for financingnewroadinfrastructureprofitableinso-cio–economictermsbutnotfinanciallybalanced using savings from already existing infrastruc-ture/or adding thenewmotorways to theexistingcompanies.


5 Forms of funding

Such contractual toll was used in France, Austria, SpainandPortugal.

In France since the 80s the State conferred new sections of the network to Concessionaires already operatingexistingroadsections,givingthemtheres-ponsibility formatching revenuesonoldmotorwaysections and the responsibility to bear the cost for settingupnewones,andextendingtheconcessionperiod in order to ensure the overall economic feasi-bility of such operations. Almost all of network exten-sion since the 80s (more than half of total network) hasbeenfinancedthorughtheadossement system.

In Austria the ASFINAG system provides the pos-sibility to use the system within the concession agreement; inPortugal several concession agree-ments in the past provided the possibility to use the adossement system and nowadays it is provided in thecontextoftherenegotiationofBRISAandBCRconcessions.

Evenifitisnotapure“adossement” system, in Spain thelasttollconcessioncontractsincludedthefinan-cing, construction, operation and maintenance ofthe proper toll motorway but also additional toll free motorways(asitisthecaseofthethirdMadridringroad- M50). The Concessionaire companies do not receive any income from these toll free motorways.

Lessons learnt:• The role of the Concession Authority as road network planner is crucial in order to identify the roadsectiontobeincludedinexistingconces-sionagreementwhileguaranteeingtheecono-micandfinancialbalanceoftheConcessionaire.

• The implementation of adossement systems allows to avoid the use of public resources, intheformofpublicsubsidies,fordevelopingthe road motorway network, especially in areas wheretrafficpotentialisnotsufficienttototallyfund the infrastructure.

• The implementation of adossement systems may create concerns regarding geographicalmonopolies within the network.

5.1.3 Shadow toll system27

A shadow toll system enables the public authority to delegate the construction, funding and mana-gement of a road infrastructure to a concession company. The public authority remunerates the concession company principally on the basis of the degreeofutilisationoftheinfrastructure(e.g.numberof users) and on the performance of the concession company(e.g.numberoflanesclosedtotraffic,in-terventionforincreasingroadsafety,etc.).Thus,theconcession company collects no toll from the users, for whom the infrastructure is free. In general, theshadow toll practice is used along motorways with fewheavyvehicle-traffic.

Shadow toll practice

n Currently in forcen Currently not in forcen Currently not in force but used in the past

In United Kingdom the use of shadow tolls has been part of a larger program developing public/private partnerships - the «Private Finance Initiative» (PFI). In the context of road transport, the PFI has takentheformof“Design,Build,FinanceandOpe-rate” (DBFO)concessionswherebyasingleprivateinvestordevelops,builds,financesandoperatestheroad for certain period. The shadow toll practice in UKwasaimedat fulfilling twomajorobjectives: (1)toobtainbettervalueformoneybyincentivizingtheDBFO company to consider life-cycle costs, and (2)



5 Forms of funding

tocultivateaprivatesectormotorwayoperatingin-dustry that will be prepared for real tolls when (and if) they are implemented.

TheDBFOprogramwaslaunchedinAugust1994.AsofMarch1997,twogroupsoffourconcessionseachhadbeenawarded foreightseparateDBFOprojects totaling£567million ($706million),andathirdgroupofsevenotherswasunderdevelopment.

As far as the financing schemes are concerned,some of the very earliest shadow toll roads in the UKwerefundedusingthemonolinewrappedbondstructure. This structure, adopted until 2007, in-cluded combinations of public bonds, private pla-cementsandEIBfunding.Inaddition,thefinancingschemes adopted to support shadow toll practice inUKalsoincludedfixed-ratebondsandindexlin-ked bonds.

Recently in the UK, some pension funds have been playinganimportantroleinsupportingbidsinPPProads. Most relevant is the M8 project in Scotland which was recently closed thanks to the support of aprivateplacementfromAllianz.

Forthetimebeing,thereisarelativeweakpipelineofroadprojectsintheUKduetothegovernment’scutsinspendingandamorehighlyempoweredpu-blic sector: the government is focusedongettingthemotorways agencymore power to act as anarm’s-lengthagency.

As far as the risk allocation is concerned, the British PFI program as a whole allowed the transfer riskto the private sector and thus the full control of the related costs. The DBFO contracts place all risks re-lated to delivery of the road on the Concessionaire, unless explicitly assumed by the Government in the contract. Thus, any unforeseen risks will be the res-ponsibility of the private sector.

Theshadowtollapproach inUKwascriticizedbymany parties: the green lobby stated that it wasencouraging more traffic by paying more if morevehicles used the road and the PPP sector did not like having to take risk on something they couldnotmanage.Despite these criticisms, it was clearin the late 1990s that the road sector in the UK

wastheonlysectorthathadmanagedtoestablisha viablePPPprogramwithout furthergovernmentintervention.

Around the year 2000 a number of schemes came forward which were a hybrid between the shadow toll structure and the availability structure. These in-cluded the A13 project which had shadow tolls only for heavy vehicles and the A130 project which was sponsored by Essex county council and had sha-dowtollsforbothcarsandheavygoodsvehicles.The reason to include shadow tolls varied over the years, but one of the core reasons was the need to achieveoffbalancesheettreatmentunderthecur-rentUKgovernmentaccountingregime.

However,theapproachchangedsignificantlywhenthe UK government adopted ESA 95 as the ba-sis for itsaccountingforPFIschemes. InessenceESA95madenodistinctionbetween the transferofusageriskandthetransferoftheavailabilityriskin terms of whether schemes could be deemed a PPP or not.

ThepurposeofshadowtollsintheoriginalDBFOswas to create a UK PPP sector for concessions and also to potentially prepare the way for a real toll concession environment. However it has become clearthatnosuchrealtollconcessionprogramisli-kely to occur soon and therefore the use of shadow tollsisquestionable.

In Spain, the shadow tolls were widely used in the past.Nowadays,duetothedifficultiesfortheAdmi-nistrations to assume the payment to the Conces-sionaires,thisschemeisnotpromotedanylonger.InPoland,sincetheintroductionofthevignettefornational network in 2005, heavy goods vehicles(HGV)havenolongerbeenchargedontheconces-sionmotorways(inordertoavoiddoublecharging).In return, Concessionaires were compensated by theState for the lost right to charge tolls. In July2011, the vignette system was replaced by dis-tance-related ETC (on State owned motorways), while the Concessionaires started to collect real toll for HGV on concession network.

In Portugal the shadow toll system was used un-tilthegovernmentdecidestoconvert in2010and


5 Forms of funding

2011 the 7 shadow toll concessions into the real modelrenegotiatingalltheexistingconcessionsandrelated financial contracts. Nowadays the shadowtoll practice is in force in Douro interior (since 2008) andatregionallevelintheMadeira(since2000)andAcores(since2006)archipelagos.

Lessons learnt:Theadvantagesofroadfundingbymeansofasha-dow toll system, compared with toll concession fun-dingareasfollows:

• In case of shadow tool system there is no ten-dency to shift trafficontoother roadsas theusers perceive the use of road infrastructure as free.

• In a shadow toll system there are no expenses associated with toll collection (in generalbetween 10 and 15% of revenue are absorbed by toll collection costs and approximately 10% of the initial cost of the infrastructure repre-sents construction of the toll stations).

• A shadow toll system does not solve the fun-ding problem as the Concession Authoritymust pay shadow toll remuneration to the concession company in due course.

•Thefinalcostisbornebythetax-payerandnotby the road user.

5.2 Overview of the financial ins-truments to support transport infrastructure in Europe

Inorder tocounteract thenegative impactsof thecrisis on investments in road infrastructure, Euro-pean governments and financial institutions havebeen recently creating and supporting new finan-cial instruments that could guarantee investmentsinexpensivelargeinfrastructure.Theseinstrumentsseem to be particularly viable in the context of the current crisis, where private banks and investors are notkeentorisktheircapitalinlong-terminvestmentsthatareofteneconomicallyandfinanciallyunviable.

Suchinitiativesregard:•Projectbonds(seeparagraph5.2.1);• Infrastructurefunds(seeparagraph5.2.2);

• Loan Guarantee Instrument for Trans-Euro-pean Transport Network Projects (see para-graph5.2.3).

5.2.1 Project bonds

The Project Bond initiative is a joint initiative by the European Commission and the EIB. Its objective is tostimulatecapitalmarketfinancingforlarge-scaleinfrastructure projects in the sectors of transport, energy and information and communication tech-nology. The Project Bond initiative is designed toenable eligible infrastructure projects promoters,usually public private partnerships (PPP), to attract additionalprivatefinancefrominstitutionalinvestorssuch as insurance companies and pension funds.

In France, the construction of the A28 toll mo-torway is financed by the concession companyusing theproceedsof the issueof indexed linkedproject bonds.

The motorway A28 is a 125 kilometres north-south motorway in Normandy, connecting the A13mo-torway (Paris-Rouen-Caen) in the north, to the exis-tingA28motorwayinAlençoninthesouth.TheA13motorway is operated by SAPN, and the A28 mo-torwayinthesouthisoperatedbyCofiroute.Inthenorth,theA28motorwaythroughtheA29andA16motorways is connected to the industrial centres of Le Havre, Dunkirk, Calais and the Lille urban area. In thesouth,throughtheexistingA28motorway,thefacilityisconnectedtoAlençon,LeMans,Toursandthe South West of France.

TheinnovativeapproachtofinancingtheA28isthefirstindex-linkedbondissueintheEurozonebya non-sovereign entity. In particular, the Project is financedbytheconcessioncompanyusing:

•the equity and quasi equity provided by theshareholders;

•the subsidies granted (by the Grantor) andcertain French local authorities;

• the proceeds of the issue of the B Bonds;• the proceeds of the issue of the A Bonds (in-

dexed linked bonds).


5 Forms of funding

Lessons learntThecontractualandfinancialstructurebaseduponthe use of Project Bonds should be carefully de-signed inorder toachieveabalancebetween therisksandthefinancialcontributionsofeachoftheparties involved in the project:

•The risks should be adequately allocatedbetween the Concession Authority, the Concessionaire, the contractors and the operators;

•The innovative financing fits to the revenuesprofileofatollmotorway,andcontributetothedevelopment of the Euro infrastructure bond market.

5.2.2 Infrastructure funds

Infrastructure funds are private equity funds thatcollect capital on the market for investments in the infrastructure sector, includingcompaniesbuildingdams, highways, bridges, oil and gas pipelines,powerplantsandothers.Byinvestingincompanies,theyenabletheconstructionof largeinfrastructureavoiding the high risk often connected to directlyfinancing them. They offer returns in the range of25 to 30 per cent and invest in the construction of infrastructure.

The Marguerite Fund is an example of inde-pendent fund investing in European infrastruc-ture28. TheFund’s investments infrastructuresarestructuredonaprojectfinancebasis for the long-term (20 years) and focus on asset creation (i.e. greenfieldprojects).

In 2013 in Spain the A1 motorway has been fi-nanced by the Marguerite Fund. The stretch ofmotorway is located on a North-South corridor connectingMadrid with the regions of Cantabria,BasqueCountry,LaRioja,NavarraandwithFrancevia Irun. The project is expected to increase road trafficsafetyinakeynorth-southaxisofSpainandcontribute to the homogenisation of Spanish andEuropean transport systems, thereby improvingconnections with other modes of transport. In ad-dition,theA1motorway’ssocio-economicbenefits

are expected in the form of improved accessibility to thenorthernpartoftheIberianPeninsula,facilitatingthe increasedflowofgoodsandservicestowardsMadrid.

In 2014 the Fund signed theN17 / N18 Gort to Tuam PPP Scheme, a greenfield road project inIreland involving the financing, design, construc-tionandoperationofanew57kmdualcarriagewaysection of the N17/N18 near Galway, on the west coast of Ireland, for the National Roads Authority of Ireland. This project is expected to significantlyimprove road safety and reduce travel time.

In addition to these signed projects, the Fund iscurrentlyinadvancednegotiationsforthefollowingTEN-T projects: the A45 TEN-T toll road in France, theA831TEN-TmotorwayinFranceandtheA94TEN-T availability road in Germany.

Lessons learnt• A publicly-backed unlisted infrastructure fund

is accepted on the market as a credible in-vestor and more easily invests in complex pro-jects and countries where other private inves-tors would not be keen to invest.

•Aninfrastructurefundaddressingroadsectormayattractsignificantco-investment,therebyresultinginahighmultipliereffect.

5.2.3 Loan Guarantee Instrument for Trans-European Transport Network Projects (LGTT)

LGTT is an innovative jointfinancial instrumentestablished and developed jointly by the Euro-pean Commission and the European Investment Bank.LGTTisadebt,risk-sharinginstrumentwhichaimsatfacilitatingalargermobilisationofprivatein-vestmentinlargeinfrastructureprojects,particularlyin financing of Trans-European TransportNetworkinfrastructure.

TheLGTT is anEIBguarantee facilityprovided tothe private sector (project sponsors/ promoters), to enhancethecreditratingoftheseniordebtbyre-ducingtrafficrisk.

28TheFundwaslaunchedbysixpublicfinancialinstitutionsasEuropeanFundforEnergy,ClimateChangeandInfrastructure(“MargueriteFund”)on4December2009


5 Forms of funding

Todate,theEIBhassigned7LGTTOperationsandmadeascreeningof50projectsforwhichtheLGTThas been contemplated by the EIB, in order to as-sess their suitability for the LGTT facility. Table below provides a list of the LGTT Operations intheroadsectorsigned.Uptodate,noneofthoseoperations is yet physically completed or opened to traffic(constructionphase).

In the context of the financial agreements signed,LGTT helps to improve the robustness of the project byeffectivelyimplementingafloorontrafficriskoverthefirstyearsofoperation.Generally,suchlowerriskprofileallowstheproject’ssponsorstorealizebettercommercialfundingtermsandthusdecreaseoverallprojectcosts.Further, thechanges to theproject’sriskprofilealsoprompts lendersthatarepreviously

29InformationgainedfromtheProjectFactSheetspublishedontheEIBwebsite-http://www.eib.org/projects/pipeline/index.htm

Table 8 –Signed LGTT Projects 29

Country/ Project Description Objective Size LGTT amount

EIBfinanceproposed

Status of implementation

Autobahn A-5 PPP TEN/ Germany

Wideningofanexistingmotorwaybetween Baden-Ba-denandOffenburgto six lanes.

Theenlargementofthemotorwaywilldeliverahighqualityroutethatwouldofferanimprovedservice and enhanced safety for users and be capable of accommodatingsignificanttrafficvolumes.

n.a. 25m EUR Up to 50% of the investment

costs.

Signed-30March2009

Expected year to start: 2021

Eix Transversal C-25 PPP /Spain

The project com-prises the renewal andupgradeoftheC-25 road ex-pressway corridor, Eix Transversal.

Improvetrafficsafetyandreducecongestionontheexistingroadnetwork.

900mEUR 70m EUR Up to EUR 300m.

Signed-29July2010 Expected

year to start: 2018

Baixo Alentejo Mo-torway /Portugal

Construction, wide-ningandupgra-dingto2x2lanemotorway standard of 117 km of IP8 and IP2 and improve-ment of 217 km of adjacent sections.

Topromoteregionaldevelop-ment, connection between Sines Harbour to the future Beja International Airport and Spain, with motorway cross-sections. To reduce travel times and vehicles operatingcosts,andenhancingsafety.

500m EUR 25m EUR Up to EUR 25om. EUR(EUR 180m SFF project

loan)

Signed–30January2009


Autobahn Augsburg Ulm PPP TEN /Germany

The project concerns thewideningofa41km section of the A8 motorway.

Upgradingofmotorway(fromfourto six lanes) in order to reduce frequentcongestionandahighaccidentfrequencyrate.

500m EUR 59.6mEUR 250m EUR Signed–31May2011



5 Forms of funding

unwilling to lend to theproject toacceptaprojectwith volume risk.Overall, LGTTbenefits sponsors,lendersandthecontractingauthorityalike.

Lessons learnt•ThepricingmechanismoftheguaranteeneedstobeclarifiedtotheConcessionaire.EIBbaseditspricingdecisiononvariousinputs(i.e.trafficforecast,indices,timingandavailabilityperiod,financialcovenants,gearing)andtheborrowerhastobeawareofhowthesedifferentfactorsaffecttheeventualpriceinordertobeabletooptimizetheproject’sfinancialstructure.

•TherigidityoftheLGTTstructurerequirestheborrower to determine which of the available guaranteetypes,revolvingliquiditystructureorsingledrawdown,aswellastheexactdatesforre-balancingtestsandexactconditionsprece-dent for potential drawdowns. However, as problems inbrownfieldprojects areoftennotimmediatelyvisibleatearlystageoftheprojectbut rather occur over the operations phase of theproject,itmaybedifficultfortheborrowerto decide on these issues in advance.

5.3 Conclusions

Depending on national policies and aims, variousforms of funding have been tested and appliedon the European roads. Some of them proved successful, some were mostly abandoned due to inadequacies (e.g. shadow tolling). In general, se-veral case studies showed that a model suitable for everysituationdoesnotexistbutspecificconditionsmakeviablecertainformsoffinancing.

Also ASECAP members have been experiencingalternative forms of financing beyond the “pure”tollingsysteminordertocopeinparticularwiththelowertrafficonthesectionstobebuiltwithrespectto the former sections. It is advisable to take into account those successful practice in order to en-hance the portfolio of tools for the funding of theEuropean roads.

Inorder todefinewhat funding toolbetter fits thesurrounding country conditions, hereafter a tablesummarising features,prosandconsof the threepure concession payment mechanism options is provided.


5 Forms of funding

Table 9 –Concession payment mechanisms: pros and cons

Direct tolls Indirect tolls Shadow tolls

Features

• Road users pay for the use of the road infrastructure•Concessionairepaidformakingroadavailable for public use•Tollsappliedtovehiclesaregenerallydifferentiatedonthebasisofnumberofaxles, period of time (day/week) and Euro standard class.

• Sometimes mixed with real tolls so that Concessionaire pays a non-availability pay-ment to authority for road or lane closures out of toll revenue.• Amount of deduction/ non-availability payment usually determined by reference tofactorsincluding:lengthofprojectroad,numberoflanesaffected,durationofuna-vailability, time of day of unavailability

• No actual tolls are collected from public• Concessionaire is paid by authority on roaduse–themoretheroadisusedthemore the Concessionaire is paid•Usuallyhavebandingmechanism,whichappliesdifferentshadowtollpaymentstodifferentlevelsoftraffic

Advantages

• Application of the user-payer principle•Maintenanceoftheexistingnetworkisguaranteed• Investments in infrastructure can be augmented• Zero cost to the Government•Governmenthasfiscalspacetofundother projects• Optimisation of utilisation of the transport network(trafficspread,inter-modalsharingoftrafficload,etc.).

•Absenceoftraffic/revenuerisksimplifiesproject•Lowerlevelofduediligenceneeded•ReducesriskonConcessionaire–ma-kingprojectcheaper•Removesemphasisonmonitoringtrafficflowsduringoperationalperiod• No consumer resistance

• Where environment is perceived to be hostile to real tolls, it can introduce PPP structures• Prepare way for real-tolled roads in due coursebycultivatinganindustryusedtotakingtrafficrisk•Mechanismoftrafficrisktransfermayreduce the complexity of project and the levelofduediligencerequired

Disadvantages

•Highcapitalconstructioncostsmeanthatprojectstrafficvolumesmaybeconsi-deredasaninsufficientrevenuestreamtomeetdebtserviceandequityreturnforsponsors •Potentialconsumerresistancetopayingforroaduseandrequiredmitigationstrate-giestosolveit

•Norevenuegenerationdevice–totalcost of project falls on public purse• Concessionaire is not concerned on the quantityoftrafficvolumeandsodonottransfertrafficorrevenuerisk•Limitedpricesignals(affectingtrafficbehaviors)

•Norevenuegenerationdevice–totalcost of project falls on public purse•Iftrafficvolumesaresignificantlyexcee-dingforecasts,governmentmayhavetopayhigher“toll”thanitbudgetedfor•Pricesignals(affectingtrafficbehaviors)arenotgiventotheusers

Source : PwC Elaboration based upon World Bank input30

30Source:http://ppp.worldbank.org/public-private-partnership/sector/transportation/roads-tolls-bridges/road-concessions


6 The European legislative framework affecting the concession sector

Severallegislativeinitiativescurrentlyinforceandre-centandupcomingonesarelikelytoaffectdirectlyorindirectly the road concession sector.

Ingeneral,theEuropeantransportpolicypursuesseve-ralgoals,amongwhichthemostrelevantconcernsthedevelopmentofafaircompetitioninthesectoramongthe operators, and the promotion of the free flow ofgoodsandpeopleinasafetymanner.Further,transportpolicy tends to incorporate social and environmental aspects,suchasregionalpolicyobjectivesandredu-cingtheexternalcostsofpollutionandcongestion.

6.1 EU legislative initiatives in the transport sector

Inthepasttwodecades,severallegislativeinitiativeswere undertaken in the transport sector and several are currently under elaboration and will likely entry into force by 2014:

•RevisionoftheEUlegislationonpublicprocu-rement and concessions;

•Revisionof theEU legislationonroadusagecharging;

• Application of the ITS Directive in the EU Members States;

• TEN- T policy in Europe; •DefinitionoftheRoadSafetyActionPlan;• Environmental Impact of Construction Works;•Revisionof theEU legislationonweightand

dimensions of trucks.

Inthefollowingparagraphsthemostrelevantinitia-tivesaredescribedwithregardtothemaincontentsandproviding specific focusonopportunities andthreats to be taken into due account while re-viewing/updatingthelegislation.

Figure 27 – EU legislative initiatives in the transport sector

«Eurovignette»Directive

1999/62/EC

Directive2004/18/CE on the

award of concessioncontracts

1999 2004 2008 2010 2011 2013 2014

Directive2010/40/EU

on ITSimplementation

ITSActionPlan

Reg. 67/2010on TenT

Directive2011/76/EC

amending theEurovignette

Directive

Directive2014/23/EU onthe award ofconcession contracts

[1° quarter 2014]

Reg.1315/2013 andReg. 1315/2013

on Ten - T2013

Directive2014/24/EU on

publicprocurement

[1° quarter 2014]

Adoption of a COMproposal revising

the«Eurovignette»

Directive1999/62/EC[on going]



6.1.1 Public procurement and concessions policy in Europe

Past Initiative Main contents

Directive71/305//CEE

•Itgivesthedefinitionoftheconcessionofpublicworks(takenagainbyallthefollowingdirectivesonthesubject),whileexcludingtheconcessionsfromitsfieldofapplication.

Directive2004/18/CE

• It provides rules for coordination of procedures for the award of public works contracts, public supply contracts and public service contracts. On one side it confirms thetraditionaldefinitionofpublicworksand introduces thedefinitionof theconceptofconcession of services, on the other side it excludes the service concessions from its fieldofapplication.

Opportunities Threats

✔ Legal certainty: clear definition of concessions andrulesappliedastoallowthestakeholderstodistinguishbetween concessions and public contracts or unilateral acts.

✔ Transparency and business opportunities: compul-sorypublicationofconcessionnoticesonofficialmediaforvaluegreaterthanEUR5millioninordertoincreasefair opportunities for all EU SMEs.

✔ Flexibility: MSsareallowedtodefinetheprocedurethatapplytakingintoaccounttheprinciplesoftransparencyandequaltreatment.

✔ Impartiality and judicial protection: applicability of the judicialguaranteesestablished in theRemediesDirec-tivestoallconcessionsinordertoincreaseconfidenceintheimpartialityofpublicauthorities’decisionsanden-courageparticipationoftheprivatesectortothetende-ringprocedures.

✔ Role of the concessionaire not sufficient protected interms of initial risk allocation and unforeseen events affecting it over concession period (e.g. constructionextra‐costs induced by legislation evolutions, trafficdecreases).

✔ Rules on durationofthecontractnotsufficientspe-cified allowing diversified implementation amongMembers.

✔ Cases affecting the economic rebalance of theconcession contract and requiring a review of thecontractarenonsufficientexplored.

✔ Limitationon tariffsorperiodextension in theap-plication law byMembersmightaffect theeconomicrebalance of the concession contracts.

✔ Misleading interpretationofdifferentdirectivesregula-tingsimilaraspects.

Recent initiative Main contents

Directive2014/23/EU

•Itestablishesrulesontheproceduresforprocurementbycontractingauthoritiesandcontractingentitiesbymeansofaconcession(itappliestoconcessionwhosevalueisequalorgreaterthan€5.186.000)

•Itcontainsaclearerandprecisedefinitionofconcessioncoveringworksandservices.•It foreseessolutionsfordealingwithchangestoconcessionscontractsduringtheirterm(modificationofcontractsduringtheirterms).

•ItallowsMemberStatestodefinetheconcessionproceduresthatapply.•It foresees the applicability of the judicial guarantees established in the Remedies

Directives to all concessions.

Directive2014/24/EU

•It establishes rules on the procedures for procurement by contracting authoritieswithrespecttopubliccontractsaswellasdesigncontests(itappliestoprocurementwhosevaluenetofVATisequalorgraterthanspecificthresholdsdependingonthenature of the contract).

•Itgivesgeneralguidelinesforsettingupanopen,restrictedorcompetitivewithnego-tiationprocedureortomanageacompetitivedialogue.

Focus on Directives 2014/23/EU and 2014/24/EU



Past Initiatives Main contents

«Eurovignette»Directive

1999/62/EC

•ItauthorisesMemberStatestolevy‘usercharges’(time-basedcharges)ortolls(dis-tance-basedcharges),settingtheminimumratesforvehicletaxestobeappliedbytheMemberStates,aswellastheframeworkforsettingtollsanduserchargingforvehicleswithmaximumpermissibleweight over 12 tonnes.Charges limited to thelevelsrequiredtomaintainandreplaceinfrastructure,couldbevariedaccordingtotheemission standards of the vehicles.

Directive2004/52/EC

•ItaimsatensuringtheinteroperabilityofelectronicroadtollingsystemswithintheEUthroughthecreationofa«Europeanelectronictollservice»inordertominimisetran-sactioncostsandenhancethetransparencyoftariffs.

Directive2006/38/EC

•Itallowstollvariationandamark-upinexceptionalcasestofinancetrans-Europeannetwork projects in mountain areas; it introduces a mandatory Euro emission class differentiation.

•Itintroducesgreaterpossibilitiestovarytollsawayfromtheleverageleveltoachievepolicyobjectivelinkedtotheenvironment,congestionandmanagementoftrafficflow,albeitwithamaximumdegreeofvariationupwards.Thescopewasextendedtocovercommercial vehicles over 3.5 tonnes.

Decision2009/750/EC

•TheDecision2009/750/EChasdefinedEETSbysettinguptheessentialrequirementsforinteroperability,aswellastheprocedural,contractualandlegalaspectsrelatedtoEETSprovision.FurthermoretheDecisionestablishedtheobligationsandrightsforEETSProviders,TollChargersandEETSUsers.

Directive2011/76/EC

• It allows the inclusion of external costs of air and noise pollution in addition to the cost ofinfrastructure.Inparticular,theDirectivesetsrulesoncalculationmethodologyforexternalcosts,maximumchargeablecosts,mandatoryprovisiononchargedifferen-tiationaccordingtoEUROemissionclasses(oncetheconcessioncontractcomeupforrenewal). Inaddition,awiderdifferentiationcouldbeusedtoreducecongestionthroughgreatervariationofpeak-hourcharges.


✔ Promotion of the user pays and polluter pays principles.

✔ Sustainable financing for road infrastructures: road chargingasalternativeforfinancingbuildingandmainte-nanceoftheinfrastructuresandattractingprivatefunds.

✔Exploringoptions fordifferentiatingchargesbyEuroclass, time of travel and axles.

✔ Inclusionofexternalcostssuchaspollutionandtrafficcongestion might boost the public perception of the concessionaire as tax collector on the behalf of the Public Authority,whileincreasingthetollsapplied.

✔ Interoperability among charging systems and usage of Eurovignette standards requireschanges infinan-cialplansduetofurtherinvestmentsontechnology(tobebornebytheconcessionaires),changesinapplicablelawandclausesofconcessionagreements.

6.1.2 Road infrastructure charging policy initiatives in Europe

Focus on revision initiative foreseen by the EC Management Plan 2014



Past Initiatives Main contents

ITS ActionPlan (2008)

•TheActionPlanfortheDeploymentofIntelligentTransportSystems(ITS) inEuropeaimsatcreatingconditionstospeedupmarketpenetrationofrathermatureITSap-plications and services in Europe.

• The ITS Action plan comprises 6 priority action areas such as Optimal use of road, trafficand traveldata;Continuityof trafficand freightmanagement ITSservicesonEuropean transport corridors and in conurbations; Road safety and security; Data securityandprotection,andliabilityissues;Integrationofthevehicleintothetransportinfrastructure; European ITS cooperation and coordination

Directive2010/40/EU

•TheDirective2010/40/EU represents the legislative framework for theCoordinatedandEffectiveDeploymentandUseofIntelligentTransportSystems.

•Itaimsatpromotingtheuseofinformationandcommunicationtechnologiesintrans-port suchasdynamic trafficmanagement, real-time traffic information,satellitena-vigation, tracking& tracing,multi-modal journeyplanners, electronic toll collection,in-vehicle safety systems.

•ItestablishesaframeworkforcoordinatedandeffectivedeploymentanduseofITS,settingcommonprioritiesanddevelopingspecificationsandstandards.

Directive2011/76/EC

• It allows the inclusion of external costs of air and noise pollution in addition to the cost ofinfrastructure.Inparticular,theDirectivesetsrulesoncalculationmethodologyforexternalcosts,maximumchargeablecosts,mandatoryprovisiononchargedifferen-tiationaccordingtoEUROemissionclasses(oncetheconcessioncontractcomeupforrenewal). Inaddition,awiderdifferentiationcouldbeusedtoreducecongestionthroughgreatervariationofpeak-hourcharges.


✔ ITSsmight contribute in reducing fatalities, conges-tion and CO2 emissions.

✔ ITSs enable road users to pay tolls easilythroughoutthe whole of the EU thanks to one subscription contract withoneserviceproviderandonesingleonboardunit.

✔ The provisions comprised in the ITS Directive im-plies significant investments to be borne by theconcessionaires.

✔ The interoperability between future ITS applications on the 5.9 Ghz band and European Electronic Toll applications based on the CEN DSCRC 5.8 Ghz band (standard used by practically all tolled motorways) isacriticalissuecurrentlyunderinvestigation.

6.1.3 Intelligent transport system policy in the EU Members States

Application of the ITS Directive in the EU Members States



Past Initiative Main contents

Regulation67/2010

•ItdefinesthegeneralrulesforgrantingCommunityaidtoprojectsofcommoninterestinthefieldofTrans-Europeannetworksfortransport,energyandtelecommunicationsinfrastructures.

•Itdefinesgeneralrulesregardingeligibility,formsofaid(e.g.subsidies,directgrants,etc.) and project selection criteria .


✔StructuringofnewFinancialInstrumentsforroadfi-nancing,beyondtheexistinginstrumentsforloansandguarantees facilitated by risk-sharing instruments andequity instruments, inorder toprovidebettersolutionsfor road infrastructure projects such as infrastructure funds,projectbondsandnewfinancial instrumentsatnational level as a combination with further sources of funding.

✔ Priorities set for road infrastructure development include the promotion of the use of the ITS .

✔Grantsavailable tofinance thedevelopment/improve-ment of road TEN-T network in thoseMS eligible forCohesion Fund and with no railway network.

✔ The priorities set for road infrastructure development do not cover the possibility to use grants available in thecontextofCEFtofinancenewroadinfrastruc-tures or the maintenance of the existing ones in the majority of MS.

✔ The trans-European transport network covers only part of the existing road transport networks.

Recent initiatives Main contents

Regulation1315/2013

•It establishes new guidelines for the development of a Trans-European transportnetwork:itidentifiesprojectsofcommoninterest,prioritiesandmeasuresfortheim-plementation of the trans-European transport network.

•Theprioritiesidentifiedforroadinfrastructuredevelopmentare:(a)improvementandpromotionofroadsafety; (b)useof ITandintegratedcommunicationandpaymentsystems;(c)introductionofnewtechnologiesandinnovationforthepromotionoflowcarbon transport; (d) provision of appropriate parking space for commercial usersofferinganappropriatelevelofsafetyandsecurity;(e)themitigationofcongestion.

Regulation1316/2013

• Itestablishes theConnectingEuropeFacility («CEF»),whichdetermines thecondi-tions,methodsandproceduresforprovidingUnionfinancialassistancetotrans-Euro-pean networks in order to support projects of common interest in the sectors of trans-port,telecommunicationsandenergyinfrastructuresandtoexploitpotentialsynergiesbetween those sectors. It also establishes the breakdown of the resources to be made availableunderthemultiannualfinancialframeworkfortheyears2014-2020.

6.1.4 TEN - T policy in Europe

Focus on regulations n. 1315/2013 and n. 1316/2013



6.2 State aid legislation31

6.2.1 Definition of State Aid

Stateaid isdefinedasanadvantage in any form whatsoever conferred on a selective basis to undertakings by national public authorities. Sub-sidies granted to individuals or general measuresopen to all enterprises do not constitute State aid (examplesincludegeneraltaxationmeasuresorem-ploymentlegislation).

To be State aid, a measure needs to have these features:

• there has been an intervention by the State or throughState resourceswhichcan takeavariety of forms (e.g. grants, interest and taxreliefs,guarantees,governmentholdingsofallorpartofacompany,orprovidinggoodsandservices on preferential terms, etc.);

•the interventiongives therecipientanadvan-tageonaselectivebasis(e.g.tospecificcom-panies or industry sectors, or to companies locatedinspecificregions);

• competition has been or may be distorted;•theinterventionislikelytoaffecttradebetween

Member States.

6.2.2 Compatible State Aid and notification

DespiteStateAidmeasuresareingeneralnotper-mittedbytheEUlegislation,thereareanumberofcircumstances in which government interventionsis necessary for a well-functioning and equitableeconomy. To cope with such circumstances the EU legislation leaves room for Members States to put in place measures that fall under the State Aid definition (compatible State Aid). EU State aidcontrolrequirespriornotification of all new aid measures to the Commission. Member States must waitfortheCommission’sdecisionbeforetheycanputthemeasureintoeffect.

There are a fewexceptions tomandatory notifica-tion, for example:

•aidcoveredbyaBlockExemption(givingau-tomaticapproval forarangeofaidmeasuresdefinedbytheCommission);

• de minimis aid not exceeding €200,000 perundertakingover anyperiodof3 fiscal years(€100,000 in the road transport sector);

•aidgrantedunderanaidschemealreadyau-thorizedbytheCommission.

6.2.3 Toll road concessions and State Aid

As described in other Chapters of this report, toll road concessions schemes envisage risks sharingbetween the Concession Authority and the Conces-sionaire. Under certain circumstances (e.g chan-gingoftheeconomicscenario,financialcrisis,etc..)Concession Authorities had to put in place speci-ficmeasures (including, but not limited to financialsupport)tosafeguardthelifeofconcessions.PartofsuchmeasuresfeltunderthedefinitionofStateAidandwerenotifiedtoandapproved(oracceptedasno State Aid) by the European Commission.

In Spain, in order to cope with the recent issues affecting the road concession models – i.e. theeconomic environment (traffic dwindling , publicentitieswithbudget constraints), the roadnetwork(imbalanced network, presence of free alterna-tives and competitive means of transport) and the concessions (tariffs not homogeneous), along twomotorways in concession - Unicat and Trucks AP7 -a lowering tariffspolicywasdeployedontheba-sis of the compensation of the annual losses of the Concessionaire by the Catalunya Government. Such interventionwasnotifiedtotheEUandapproved.

In Greece, recent decisions by the European Com-mission authorized State aids for four motorwayprojects that had run into trouble as a result of the financialcrisis inorder tosecure thecompletionofthe projects. Such projects are: Olympia Odos, Ionia Odos,CentralMotorwayandAegeanMotorway.

In France,in2010,fiveConcessionairessignedwiththe State an «engagement vert»committing them-selves in developing environmental programs with

31 Source: http://ec.europa.eu/competition/index_en.html



specific objectives concerning noise reduction,water protection and CO2 reduction along theirnetworkinexchangeforaoneyear-extensionoftheconcessionperiod.Theengagementvertsareac-cepted as no State aid by the EU.

A new investment package valued at 3.6 billion€ has been agreed between the State and theConcessionaires. It is currently pending approvalfrom the EU.

Further, in France, since 2000 the introduction of anaccountingregimetobeappliedtotheexistingconcessions more in line with the common one (in particularwith regard to thedepreciationprocess)was compensated by the possibility to extent the concessionperiod.Such interventionwas notifiedto the EU and approved.

TheConcessionairesconsiderthepossibilityofferedby the European Commission to have a certain de-greeofflexibilityontheadoptionofStateAidmea-sures by the Concession Authorities as key to safe-guardtheinterestsofEUmarketplayers.Differently,distortioninthecompetitionmightbegeneratedbynon-EU companies approaching the market withthefinancialsupportoftheirGovernments.

6.3 Conclusions

Theevaluationofthelegislativeframeworkinforcein the European Union allows the identification ofareas currently not covered by the current EU initiatives.

In the context of the Public procurement and concessionspolicyinEurope,theupcominginitia-tives should be aimed at improving the legal cer-tainty, transparency and flexibility of the procure-ment procedures in force in the Member States.

WithregardtotheRoadinfrastructurechargingpo-licy initiatives inEurope,theeffortstobemadebythe EU and national policy makers should be aimed atpromotingtheuserpaysandpolluterpaysprin-ciples and sustainable forms of road infrastructures financing,andatexploringoptionsfordifferentiatingchargesbyEuroclass,timeoftravelandaxles.

ConsideringtheareasnotcoveredbythecurrentIn-telligenttransportsystempolicyintheEUMembersStates, the upcoming initiatives should be aimedatpromotingtechnologiesabletoreducefatalities,congestionandCO2 emissions and to allow road users to pay tolls easily.

Lastly, as far as the TEN - T policy in Europe is concerned,moreeffortsareenvisaged inorder tostructurenewfinancial instruments for road finan-cingbeyondtheexistinginstrumentsasloansandguarantees facilitated by risk-sharing instrumentsandequity instruments. Inparticular, alternative fi-nancial tools such as infrastructure funds and pro-jectbondsmayprovidebettersolutionsforfinancingroad infrastructure projects, even as a combination withfurthersourcesoffinancing.

Under certain circumstances (e.g changing of theeconomic scenario, financial crisis, etc..) Conces-sionAuthorities had toput inplace specificmea-sures(including,butnotlimitedtofinancialsupport)to safeguard the lifeof concessions.Part of suchmeasuresfeltunderthedefinitionofStateAidandwerenotifiedtoandapproved (oracceptedasnoState Aid) by the European Commission. In parti-cular, in Spain and in Greece, in order to cope with the recent issues affecting the road concessionmodels (e.g. traffic decreases and state budgetconstraints) the European Union approved the state interventioninordertomitigatethefinancialcrisisoftheConcessionaire.Thedegreeofflexibilityontheadoption of State Aid measures by the Concession Authorities iskey tosafeguard the interestsofEUmarket players. Differently, distortion in the com-petitionmightbegeneratedbynon-EUcompaniesapproachingthemarketwiththefinancialsupportoftheir Governments.

Last but not least, it isworthnotingthatEU insti-tutions have to take an active role in supporting theconcessionmodelbyeffectivelycooperatingwith Members States in order to avoid that na-tional transposition laws of European directives introduce stricter rules narrowing the scope of the EU legislationwhilealsoensuring timingandsmooth implementation phase.


7 Conclusions and recommendations

7.1 Advantages of road toll concession scheme

Despite the effort spent by the EU and by theMember States to stimulate the use of other trans-port means, road transport still represents the most utilized way of moving people and freight acrossEurope:72%ofpassengersaretransportedbycarand45%offreightistransportedbytrucks.

Motorwaysarethesafestandlesscongestedtypeof roads and they can ensure a smoother and spee-dertrafficflowcomparedtootherroadcategories.However,comparedtootherroadtypologies,theyare more expensive and imply a more complicated operational model (e.g. to collect fee, in case oftolledmotorways, tocontrol trafficflow, toensuremaintenanceandsafetyequipmentareadequatetospeed, etc..).

In the concession scheme a specialized operator(the concessionaire) is involved in financing, buil-ding,maintainingandoperatingthemotorway. Thankstotheirspecializedcapabilities,concessio-naires have successfully contributed to the deploy-mentandoperationoflargepartoftollroadnetworkthroughout Europe for more than 50 years. Theirmotorways have enabled the development of our economiesandasafemobilityofourcitizens.

Variousexperiencesindifferentcountriesshowthatthe use of toll roads and concessions, thanks to the economyofscalesgeneratedbythemanagementofaportfolioofassetsandbythemanagementandtechnical knowledge of concessionaires, is muchmoreefficientandsustainablethananyotherroadfinancingsystem.

The advantages of road toll concessions are ob-viousandincludeamongothers:

•bringing forward the beginning and redu-cingdurationoftheroadconstructionworks,without waiting for the availability of publicfunding;

•sparingofpublicfunds(i.e.taxmoney)sothatthey can be allocated to other social or invest-ment priorities;

•transferring risks to dedicated counterparts:mainly those related to construction costs and trafficdemand;

•generally cheaper construction costs, espe-ciallyifprivatefinancingissought;

•thanks toearmarkingof toll revenues, itgua-rantees propermaintenance and upgrade ofthe facility during the whole concession pe-riod, committing both human and monetaryresources, and it also brings excellent safetyrecords;

•enablingthecontroloftrafficdemandandtheinternalizationofexternalcostsoftransport;

•more flexibility to react to changes in ove-rall economy situation and to adapt to a new environment from legal, technological, finan-cial point of view as long as the new objec-tiverequirementsdoesnotbreachtheoriginalcontractualarrangementsandare in linewiththeavailablecashflows;

•being an highly adaptable infrastructure, itmay foster new sustainable mobility services and usages: HOV lanes, mass transit ser-vices through express buses and coaches,carpooling;

•fiscal return to the general budget throughtaxes32;

• Neutral impact of concessions on public ac-counts. Investments have no impact on public deficitandthedebtsoftheconcessionshaveno impact on public debt, which is a key issue forGovernmentsandtheireffort toreachtheEuropeanfiscalconsolidationgoals.

32InFranceandinSpain,above40%ofgrosstollsproceedsareactuallydirectedtowardsStatebudgets


7 Conclusions and recommendations

7.2 RecommendationsOn the basis of the above analyses, hereafter re-commendations for the future development of road toll concession schemes in Europe are reported:

1. Road network plays a leading role in Euro-pean mobility landscape yet it still requires urgent and huge investments:• adding capacity when needed and com-

pleting the road network is still of uttermost importance to support European integration and economic growth;

• achieving missing links, helping integratingremoteterritoriesandbuildingamoreresilientnetwork;

•developingandoptimizing road networks in urban areas toreducecongestionwhileen-hancingsustainablemobility;

•putting an end to years of underfunded maintenance leading to increasingly de-cayinginfrastructures.

2.InaperiodofscarcityofStatefinances,alter-native funding solutions for road maintenance and development, given that: • maintenance and upgrades on the existing

network are due to become an increasingburdenonStatebudgets;

•delayed maintenance works resulting frombudget adjustments only lead to increased costs of repairsorworst,ailinginfrastructure;

• public funds for new investments are scarce: sectorswithself-financingcapabilitiesshouldbetapped when possible, therefore schemes in-volving private investors should be favored.

3. Concession model is a powerful tool to help building and maintaining European roads:•leveraging the investmentcapabilitiesofma-

ture concessions to avoid passing costs on tax payers:

-developing the possibility of backing newconcessions to mature network in order to complete works without delays and at minimum costsbothforpublicfinancesandroadusers;

-allowingamoreflexibleapproachoncontractmanagement (e.g. tariff increases, durationextensions…) to finance new investmentsandupgradesofthenetwork,incompliancewithEuropeanregulations;

• as clearly demonstrated in this study, conces-sion is a highly flexible and adaptable toolwhichmayfitdifferentobjectivesrelatedtolocalcontexts;•promoting innovative contractual tools sup-porting the economic and financial balance ofthe Concessionaire to attract private investors.

4. Concession is compliant with the “users pay principle” and “polluters pay principle”: • the most equitable solution for building,maintainingandoperatingroadinfrastructures;

• earmarking of funds collected from users guaranteesafairlevelofpricingandasustai-nablemanagementoftheinfrastructure;

•concession and toll are efficient tools ofcongestion management practices in ur-ban areas to reduce environmental impacts as well as the financial burden for publicauthorities operating and maintaining suchinfrastructures;

•roadconcessionbeingasustainablemodel,it should be treated fairly compared to other transportation modes, especially regardingfiscalmatters;

• promotion of cross border enforcement operationsconcerningroadsafetyandtollingviolations across Member States, in order to maintainequityamongstusers.

5. Concession scheme should be optimized to attract private investors:•promoting the legal security and predicta-

bility of the concession schemes is a prere-quisiteforprivateinvestments;

•developing high-tech solutions to enhance security throughITSandfacilitatetollingwithsecure modern payment means;

•authorizing revision of general risk alloca-tion schemes as to alleviate the position of the Concessionaire if needed:

-authorizingmodulationofrisksovertimedueto the evolution of the network and possibi-litytorelyongovernmentsubsidiesincertaincases(e.g.majortrafficdecreases);

-identifyingclearlythecasesthat implyeco-nomic rebalance of the concession contract; facilitating tariffs increasesorperiodexten-sion to make economic rebalances; al-lowingthe introductionofminimumincomeguarantees.


Application of the directive 1999/62/EC in the ASECAP members’ network

In1999, theEuropeanCommission issued thesocalledEurovignetteDirective1999/62/ECwith theaimtopreservethefunctioningoftheinternalmar-ketandpreventanydiscriminatorychargingprac-ticebyMemberStates.TheEurovignetteDirectiveasmodifiedbyDirective2006/38/ECandbyDirec-tive 2011/76/EU set out several rules to be applied bytheMemberStatesinordertochargetheroadusers.

The Directive does not oblige Member States tointroduce user charges, however in case userchargesshouldbeapplied, tollsshouldberelatedto the cost of constructing, operating and deve-loping the infrastructure, should allow themainte-nance and the replacement of the infrastructure and shouldbeaccording to theemissionsstandardofthe respective vehicles.

TheEurovignetteDirectiveallowstwotypesofpay-ment for the use of road infrastructure as follows:

• Vignettes or time-based charges or user charges:thepurchaseofavignettegivestheuser the right to use the infrastructure for agivenperiodoftime(aday,aweek,amonthor a year);

• Tolls or distance-based charges: tolls are appliedtovehiclestravellingagivendistanceon the infrastructure and aredefinedon thebasisofthedistancetravelledandthecatego-ry of vehicle. Tolls can be applied to the whole national network or to selected infrastructure.

The majority of Member States have now imple-mentedsometypeofroadchargingbothforheavygoodsvehiclesandforlight(orprivate)vehicles.

Annex I

Road charging system applied in Europe for heavy goods vehicles

nVignette(time-basedchange)n Electronicnetwork-widetoll(distanncebasedchange)nTollwithphysicalbarriers(distanncebasedchange)nNeithervignettenortollsnVignette(time-basedchange)underpreparationn Electronicnetwork-widetoll(distanncebasedchange)under

preparation

As far as the road charging of heavy goods vehicles is concerned, countries can be groupedinto sixmain categoriesdependingon the typeofchargingsystem,asfollows:

•Vignettesystemsinplace:Bulgaria,Romania,HungaryandLithuaniahavenational vignettesystems for trucks. Sweden, Denmark, the Netherlands, Belgium and Luxembourg ope-rateashared«Eurovignette”.

•Vignette systems in development: The UKandLatviaaredevelopingvignettesystemsfortrucks.

•Electronic network wide tolling systems inplace:Germany,Austria,theCzechRepublic,Slovakia,PolandandPortugal.

•Electronic network wide tolling in develop-ment: Belgium, France and Hungary. Francewill only be applying the charges to existinguntolled state owned motorways, so it will re-


Annexes

tain its present system of tolls with physical barriers on motorway concessions.

• Tolls with physical barriers: includes Ireland, France, Spain, Italy, Slovenia, Greece and Croatia. Although other countries have ma-nual tollingona small numberof roads, thescale is not significant. Poland andPortugalalso have tolls with physical barriers on part of the network, although they are classifiedas having electronic network-wide tolling inplace.

• No tolls: The UK, Latvia, Finland, Estonia, Mal-ta and Cyprus.

Road charging system applied in Europe for light private vehicles

nVignette(time-basedchange)n Electronicnetwork-widetoll(distanncebasedchange)nTollwithphysicalbarriers(distanncebasedchange)nNeithervignettenortollsnVignette(time-basedchange)underpreparation

As far as the road charging of light (private) vehicles is concerned, countriescanbegroupedintosixmaincategoriesdependingon the typeofchargingsystem,asfollows:

•Vignette systems (time-based charges) inplace: 7 Member States have put in place nationalvignettes(CzechRepublic,Slovenia,Austria,SlovakRepublic,Hungary,Romania,Bulgaria).

•Vignettesystemsindevelopment:inBelgium.•Electronic network wide tolling systems inplace:inPortugal.

• Tolls with physical barriers: 7 Member States collect tolls with physical barriers on the mo-torways (Spain, France, Ireland, Italy, Greece, Poland, Croatia).

• No tolls: 10 Member States still have no sys-teminplaceforcharginglightvehiclesfortheuse of road infrastructure (UK, Germany, Den-mark, The Netherlands, Belgium, Sweden,Finland, Latvia, Estonia, Cyprus).


Annexes

Annex IIList of sources

Reports• AISCAT–AISCAT in figures 2013• APCAP–Anuàrio estatìstico de segurança rodoviària (2012)• APCAP–As vantagens de viajar em autoestradas (2013)• APCAP–Key figures 2012• ASECAP–Key Figures 2014• ASECAP–Statistical Bulletin 2014• ASECAP–Toll Road Operators – Strongly committed to safe and sustainable mobility (2014)• ASECAPmembers–National Reports presented during the ASECAP Study and Information Days • ASETA–Toll in motorways in Spain 2011• ASFA–Key figures 2013• ERSO–Traffic Safety Basic Facts 2012 – Motorways• EuropeanCommission–EU transport in figures – Statistical pocketbook 2013• Eurostat–Energy, transport and environment indicators (2013)• HUKA–Key figures 2013• Ricardo–AEA/ECDGMOVE-Evaluation of the implementation and effects of EU infrastructure charging

policy since 1995 - Final • DERD/WERD–Analysis of highway concessions in Europe

Data• EuropeanCommission–Road safety evolution in EU• Eurostat–Length of motorways



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Ljubljana

Bratislava

Beograd

Moscou

London

Praha

Lisboa

Warszawa

Amsterdam

Oslo

Rabat

Roma

Dublin

Budapes t

Athinai

Paris

Madrid

Copenhague

Zagreb

Wien

Berlin

Danemark

Royaume-Uni

Irlande

Allemagne

Pays-Bas

France

Italie

Espagne

Grèce

Portugal

Pologne

RépubliqueTchèque

Hongrie

Norvège

Serbie

Croatie

Slovaquie

Slovénie

Autriche

Maroc

Russie

ABOUT ASECAP

ASECAP is the European Association of Operators of Toll Road In-frastructures,whosemembers’networksspanmorethan48,000Kmofmotorways,bridgesanstunnelsacross21countries.

ASECAP's purpose is to defend and develop the system of mo-torways and road infrastructure in Europe. Tolls are applied as a meanstoensurethefinancingoftheirconstruction,maintenanceand operation.

Asecap Full Member

Asecap Associate Member

ASECAP Network as for 01.01.2013

ASECAP Network in construction

TollBridges,TunnelsandRoads


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Ljubljana

Bratislava

Beograd

Moscou

London

Praha

Lisboa

Warszawa

Amsterdam

Oslo

Rabat

Roma

Dublin

Budapes t

Athinai

Paris

Madrid

Copenhague

Zagreb

Wien

Berlin

Danemark

Royaume-Uni

Irlande

Allemagne

Pays-Bas

France

Italie

Espagne

Grèce

Portugal

Pologne

RépubliqueTchèque

Hongrie

Norvège

Serbie

Croatie

Slovaquie

Slovénie

Autriche

Maroc

Russie

Notes

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Notes

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