Saturday 21 October 2017

Loss-making toll operator now targets off-ramps for charges

Losses on the M6 motorway between Ballinasloe and Galway are mounting
Losses on the M6 motorway between Ballinasloe and Galway are mounting
Paul Melia

Paul Melia

THE OPERATORS of a loss-making tolled road want motorists to pay more charges, as part of efforts to shore up its creaking coffers.

Losses on the M6 motorway between Ballinasloe and Galway are mounting, and the company that operates the road wants more tolling points to be introduced.

This would capture drivers who enter and exit the motorway at different points to avoid paying the €1.90 charge.

But Transport Minister Leo Varadkar has ruled out any further toll increases across the motorway network for now.

It is also understood that the National Roads Authority (NRA), which signed the contract with N6 Concession, will resist any further tolling points.

The M6 is 57km long and was developed as a public-private partnership (PPP). It opened in 2010 and cost €427m to build. There is just one tolling point on the motorway at the moment.

The operators now want to introduce a series of tolling points along the entire stretch, including tolled ramps to capture motorists avoiding the toll by exiting the motorway around the tolling point.

These changes are needed to "save" the project, sources said, because traffic volumes are running at just 9,500 a day – 6,000 vehicles fewer than expected when the deal was signed.

The low volumes also impact on the State, which has a share in any profits.

"This level of loss is unsustainable," a source close to the project said. "If this situation is allowed to continue, the M6 PPP could default on its commercial loans with Irish and international banks and with the European Investment Bank in the near future."

There are nine tolled roads across the country and four are loss-making – the M6, N25 Waterford bypass, M3 in Meath and the Limerick Tunnel.

The NRA has paid €15m to the two companies operating the Limerick Tunnel and M3, because it shared the risk of traffic volumes not being reached, meaning it must make up the shortfall.

But similar arrangements are not in place for the M6 or N25, meaning the private companies must bear the losses.

Records from the Companies Registration Office show that the M6 now carries an accumulated loss of some €30m, while accounts filed by Celtic Roads Group (Waterford) Ltd show accumulated losses of €26.3m for 2010 and 2011 for the N25.

It is understood that the operators of both roads have had informal meetings with the NRA about their financial situation.

URGENT

Celtic Roads Group declined to comment, but it is understood that N6 Concession has been ordered by its banks to conduct an urgent study into future traffic volumes – and to consider if additional tolling points could be introduced.

If the loans cannot be repaid, the bank has the option of selling its stake on the open market.

If no buyer is found, it could default to the State but the NRA, which last week revealed it does not have enough money to properly maintain the network, would be forced to take over maintenance of the motorway.

A spokesman for the NRA said it did not comment on confidential matters relating to PPP projects.

"However, PPP agreements generally involve significant risk transfer to the PPP companies," the spokesman added.

Irish Independent

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