Friday, June 30, 2006

Spain: Leader in Infrastructure Development

Continued from Page 5

There are numerous examples of small, local toll roads built and managed by private companies, but the sale of the Chicago Skyway, the city’s only toll road, for an unprecedented $1.83 billion in 2004 marked the first time an existing U.S. toll road had been sold. A partnership of Cintra and Macquarie Infrastructure Group purchased the rights to improve and operate the Skyway, a 12-kilometer stretch of elevated highway that reaches the border with Indiana, for the next 99 years.

The City of Chicago’s windfall, and the success thus far of the concession, has piqued interest around the rest of the country in these high-stakes sales. Indiana received an offer of $3.85 billion from the Cintra partnership for a toll road crossing the state between Ohio and Chicago. This offer, for a 75-year concession, trumped the Chicago Skyway as the most money offered to a U.S. municipality for an asset. Cintra says it plans to spend about $700 million over the first nine years for electronic tolling and other improvements, and to add about 20 kilometers of new lanes.

Though Cintra won the bid, Spanish companies accounted for all four of the companies qualified to bid for the road.
Cementing its leadership position in the U.S. thus far, Cintra also was chosen as a strategic partner with the state of Texas for the development of the Trans-Texas Corridor.  At first analysis of the needs of the planned corridor, Cintra has proposed developing at least five toll roads and investing approximately $6 billion.

Despite the apparent success of private toll roads and frequent municipal enthusiasm for the cash infusion, there have been examples of local opposition to private toll road concessions. Most in opposition decry the higher toll rates that will go into effect, and the idea of a private company—especially a foreign one—managing and  making a profit off local infrastructure.

“People think they can use political influence to keep toll costs down if it’s a state enterprise, but a private concession has a formula in which it allows regular toll increases on an annual or biannual basis,” says Samuel. “They just think they’ll be paying a lot more tolls, it’s as simple as that.”

Governments respond that tolls would need to rise in the near future, whether managed by a private company or a public authority.

There have also been security concerns expressed about toll roads, which are public assets, being owned or controlled by foreign companies. Experts, however, conclude that such concerns are unfounded, as local and state police departments remain in control of security.

As the experience of PPPs handling toll road concessions grows in North America, an increasing number of municipalities have expressed interest in reaping the benefits, and all major Spanish companies have plans to submit bids for future projects.