The operator of the €800m vehicle tunnel that runs under the River Shannon in Limerick received €8.5m in taxpayers’ money last year as traffic volumes on the route missed targets due to the impact of the pandemic.
The operator is guaranteed minimum traffic levels.
If they’re missed, Transport Infrastructure Ireland (TII) has to pick up the bill for the shortfall.
The company behind the tunnel is DirectRoute Limerick, which signed a contract in 2006 to operate the tunnel for 35 years.
It opened in 2010.
The company is owned by funds controlled by the
international investment companies Meridiam, 3i and TIIC.
Transport Infrastructure Ireland has forked out tens of millions of euro in recent years to operators of toll roads by way of payments made under
“The Covid-19 pandemic has reduced traffic using the toll road, but the project will not experience a reduction in overall revenue due to the traffic guarantee – paid by TII,” note newly-filed accounts for DirectRoute Limerick.
The accounts show that DirectRoute Limerick reported revenue of €31m last year.
That included toll income of €13.8m, operating payments of €8.8m and traffic guarantee payments of €8.5m.
In 2020, it reported revenue of €22.5m. That included toll revenue of €12m, operating payments of just under €1m and traffic guarantee payments from TII of €9.6m.
Despite the revenue recorded in 2021, the company still reported a loss of €4m for the year. That compared to a €10.1m loss in 2020.
The losses were propelled by huge interest repayments made on loans. They amounted to €20m last year and €17.8m in 2020.
“Covid-19-related travel restrictions continued into 2022, but on February 28, 2022 substantially all remaining restrictions were lifted,” the accounts note.
“As a result, and as experienced during the second half of 2021, traffic volumes have been increasing,” the accounts say.
Cars are charged €2 for using the Limerick tunnel, while buses and goods vehicles pay between €3.50 and €6.30.
The directors of the company have also said that the firm may have insufficient resources to repay shareholder loans in full at the end of the project.
The concession is due to end in 2041, when the tunnel will be handed back to TII.
“The company is not making repayments on the mezzanine and shareholder loans that were provided to fund the overall project,” the accounts for DirectRoute Limerick state.
“The directors acknowledge that the current forecasts indicate that based on the waterfall of payments over the life of the project, that while all third-party funding is forecast to be repaid, there may not be sufficient resources to repay the shareholder loans in full at the end of the project,” the accounts confirm.
“The directors are satisfied that the shareholders are aware of this possibility,” they add.
The accounts show that the company had €120.4m of deferred government grants at the beginning of 2021, of which €5.8m were amortised during the year.