Underused toll roads could cost taxpayer €30m
State pays M3 and Limerick tunnel companies for low traffic levels
M3 toll road near the N3 at Ratoath Toll Roads: State to pick up bill for its lack of use. Photograph: Alan Betson
Minister for Transport Leo Varadkar has conceded more than €30 million could be spent in the next three years compensating toll operators on national routes where traffic levels have fallen below expectations.
Mr Varadkar blamed so-called “traffic guarantees” attached to the Clonee-Kells M3 motorway and Limerick tunnel .
In both cases, the State provides subsidies to make up revenue if funds from tolls fall below certain levels and this is contained in the terms of the contracts entered into by the last government.
“In a worst-case scenario, more than €30 million could be spent over the next three years on these traffic-guarantee payments. This amount of money would go a long way in terms of road maintenance and upkeep,” he said.
Mr Varadkar also said the money could have been used to build a medium-sized new roads project, citing the Athy bypass as an example, but insisted he was legally constrained from altering contracts.
“I have committed to ensuring that no similar contracts will be signed in the future. Unfortunately, under the previous government these contracts were signed and as they are legally binding, it is not open for the State to just stop making these payments.”
The Limerick tunnel contract was signed in August 2006 and the M3 contract in April 2007 by the National Roads Authority (NRA) on behalf of the Government when Martin Cullen of Fianna Fáil was minister for transport.
Both schemes were built under public-private partnership (PPP) and traffic levels on the two projects have been below expectations since they opened. The NRA has estimated the cost in 2013, 2014 and 2015 of the “traffic guarantee” based on no traffic growth at €31.96 million for both schemes. If traffic grew by 1 per cent the figure would be reduced to €30.05 million and down to €28.13 million if growth was 2 per cent.
Mr Varadkar has already said truck drivers are using smaller roads to avoid tolls on various routes, including the Clonee-Kells M3 and Limerick tunnel routes. He has proposed a one-month toll “holiday” for heavy goods vehicles in November in an attempt to entice hauliers to motorways.
Substantial funds are already understood to have been paid to the two PPP operators to make up for the shortfall in anticipated toll revenues. Traffic guarantee thresholds increase annually in line with the PPP contracts concerned, according to the NRA.
Fine Gael TD for Dublin South-East Eoghan Murphy submitted a parliamentary question to Mr Varadkar inquiring about the cost to the State of traffic guarantees provided for the M3 and Limerick tunnel schemes and the estimated cost in 2013, 2014 and 2015 of the guarantees based on zero to 4 per cent traffic growth.
Mr Varadkar passed the query to the NRA, which costed the options laid out by Mr Murphy and said if traffic grew by 3 per cent the cost to the State would be reduced to €26.15 million and if growth was 4 per cent then the figure would go down to €24.13 million.
Earlier this year, it emerged at the Public Accounts Committee that even if traffic volumes grew by an average of 2.5 per cent a year, the NRA would still to make traffic guarantee payments until 2025 in the case of Clonee-Kells M3 and for the next 28 years for the Limerick tunnel.
The PAC heard the shortfall on toll revenues was shouldered two-thirds by PPP and one-third by the State, and companies had been unwilling to bid for the tenders without a guarantee of minimum traffic volumes.
Mr Varadkar told Mr Murphy he had responsibility for overall policy and funding in relation to the national roads programme, but the planning, design and implementation of road projects was a matter for the NRA in conjunction with local authorities.