Bailout puts rail projects in jeopardy
Published 01/04/2011 | 05:00
THE future of Metro North and other key infrastructure projects has been thrown into doubt because of the fallout from the EU/IMF bailout.
Key roads and rail projects are unlikely to go ahead unless "financial credibility" is restored and the international markets are assured that the State can make repayments, the Department of Transport has warned.
And even if the projects eventually get the green light, they will end up costing taxpayers millions of euro more than planned for.
This is because Ireland will be forced to pay a premium to borrow money on the international markets in the wake of the ongoing banking and economic crisis.
In a 322-page briefing note to new minister Leo Varadkar, which was published last night, officials warn that the markets will be "reluctant" to lend unless the debt crisis is stabilised.
This means that public private partnership contracts -- where the private sector bankrolls a project and the State repays the cost over time -- are at risk of being permanently shelved.
Projects affected include Metro North, Metro West, DART Underground and at least four roads projects.
"The successful awarding of a major PPP contract. . . is particularly challenging in current circumstances where Ireland has been the subject of intervention by the IMF/EU," the Department warned.
"Until financial credibility is restored, the international debt funding market will be reluctant to lend funds to finance projects in Ireland, the repayment of which is ultimately dependent on the Irish state."
On Metro North, due to be finalised later this year, it adds: "Financial closure will be dependent on Ireland's financial credibility internationally and on the prevailing position of the international funding markets towards providing funding to Irish infrastructure."
The department said that of the €4.8bn available for transport projects from 2011 through 2014, some €1.7bn is already committed. This includes €800m for roads that have already been built.