Downgrade by S&P for bonds backing the Limerick Clare tunnel
STANDARD & Poor's has downgraded bonds which back a tunnel linking Limerick to Clare because fewer people than expected use the tunnel.
S&P, which rates 10 public private partnerships around Europe, said it was downgrading three projects because they are not producing enough tolls to meet expectations.
DirectRoute (Limerick) Finance Plc's bonds have been downgraded to BB+, the rating agency said in a report yesterday. The State has issued some guarantees to the owners of the tunnel to make up for the difference between the forecast tolls and the actual tolls.
The €660m twin-bore tunnel was opened in 2010 and measures 675m. It was built by a consortium that included Sisk as well as companies from Austria, the Netherlands and Denmark.
The report highlights once again the secrecy surrounding so-called public-private partnerships in Ireland. All other nine projects in other countries revealed information about issues such as borrowing.
In Ireland, most details are kept secret for commercial reasons. This makes it difficult to assess whether the projects provide value for money for the taxpayer.
The Economic and Social Research Institute criticised infrastructure planning in Ireland at a conference last week, noting that many projects were not properly costed, and added the Government relied too heavily on estimates produced by the companies and politicians promoting projects.
Last week, Limerick mayor Jim Long said the city council should reject proposals to increase the cost of tolls for using the tunnel.
The National Roads Authority has sanctioned 10pc increases in tolls for trucks and lorries from January. Two and three-axle vehicles will have to pay €4.60 to use the tunnel and heavy trucks will have to pay €5.80 per trip.