State pays €120,000 a week to subsidise road toll operators
Published 20/02/2012 | 05:00
THE State is paying out more than €120,000 a week to subsidise the toll operators of two of the country's motorways.
Some €6.31m was paid last year to companies which built the N18 Limerick Tunnel and the M3 motorway in Co Meath because motorists are not using the roads.
The money was paid because the National Roads Authority (NRA) guaranteed a certain number of vehicles would use each privately-funded route when opened, but the the numbers have not been reached.
Just 22,250 vehicles a day use the M3, when 26,250 were expected -- a shortfall of 4,000 a day. The NRA paid €1.86m in compensation to operators Eurolink Motorway Operation Ltd, made up of Spanish company Cintra Concesiones de Infraestructuras de Transporte SA, and SIAC Construction Ltd.
Traffic volumes on the Limerick Tunnel are even lower.
Just 14,400 a day are using it, when 19,400 were expected.
The 5,000-a-day shortfall resulted in the NRA paying operators Direct Route (Limerick) Ltd, which includes one of the State's biggest building contractors, Sisk, and AIB, a total of €4.45m in 2011.
The total payments amount to €6.31m, but the payments are far in excess of the €5.8m the NRA expected to have to fork out.
A spokesman said the payments were agreed to get better value when the schemes were being built.
"Unfortunately due to the economic circumstances, traffic levels are below expectations and as a result payments are being made," he said.
"This is a common contractual arrangement for public private partnerships (PPPs) to create a competitive environment during the bidding phase of the work, offering greater value, along with operational and maintenance costs being covered by the private operator.
"This payment is not for profit. It is to help meet their debt repayments."
He added that the NRA received €2.2m from toll operators of other roads because traffic volumes were ahead of projections. When the number of vehicles using the Limerick Tunnel and M3 hit targets, the payments would cease.
Traffic risk was a critical issue for the companies when they submitted bids to build the roads.
Documents from the Department of Transport show that the guarantees were introduced to address the "worst case banking scenario of what if no cars drive on the road".
The M3 cost almost €1bn, with tolls ranging from 70c for a motorbike, €1.40 for a car and €3.40 for a HGV.
The Limerick Tunnel cost €600m and opened to traffic in July last year. Tolls range from €1 for a motorbike, €1.80 for a car and €5.90 for a HGV.
The traffic guarantee was partly put in place because the success of the project depended on Limerick City Council introducing a traffic management scheme which would discourage cars from travelling through the city at peak periods, instead of using the tunnel.
"NRA expects to have to make payments under these schemes in 2012 due to the impact of the downturn and in the Limerick Tunnel case due in part also to the delay in implementing an appropriate traffic management strategy for the city," is states.
But the scheme is not yet in place because Limerick City Council does not have the money to implement it.
A spokesman for the council said the city centre project was about 50pc complete, but the local authority needed to source up to €8m in funding to upgrade and pedestrianise O'Connell Street. The money was not available, he added.