Taxpayers face €200m bill for underused toll road

State has paid €34m to compensate for lower traffic flows in Limerick Tunnel

Taxpayers are likely to end up paying up to €200 million to the private operator of the Limerick Tunnel due to lower-than-expected traffic flows. Photograph: Seán Curtin/Press 22

Taxpayers are likely to end up paying up to €200 million to the private operator of the Limerick Tunnel due to lower-than-expected traffic flows. Photograph: Seán Curtin/Press 22

 

Taxpayers are likely to end up paying up to €200 million to the private operator of the Limerick Tunnel due to lower-than-expected traffic.

The Dáil’s Public Accounts Committee heard on Thursday that the State has paid the toll operator €34 million under the terms of a public-private partnership (PPP) contract to compensate for the smaller numbers using it.

Labour TD Alan Kelly said the terms of the contract, which is due to run up to 2041, were “insane” and “the figures here are astronomical for the taxpayer”.

A Transport Infrastructure Ireland official told the committee “conservative estimates” projected further traffic payments of about €150 million over the remainder of the contract, bringing the total projected State expenditure to about €200 million.

Michael Kennedy, who is responsible for PPP procurement at Transport Infrastructure Ireland, insisted the terms of the contract were “not insane”.

He said traffic risk-sharing formed part of the contract on the basis that private funders needed a “floor” for traffic volumes to justify investing in the scheme.

Mr Kennedy noted in other PPP roads, where the risk was fully carried by private operators, traffic volumes have on average been 70 per cent of what was projected when they were built.

Diverted

He said it was not fair to characterise the deal as a bad scheme given that 24,500 vehicles were being diverted away from Limerick city centre every day.

Robert Watt, secretary general of the Department of Public Expenditure, accepted that State payments in the case of the Limerick Tunnel were “significant”.

However, he said motorways were very expensive – running at an average of about €10 million per kilometre – but sharing the risk would have impacted on the cost of the scheme.

“The challenge for us always is what is exactly the balance between the taxpayer, tolls and the public,” Mr Watt said.

Mr Kelly, however, said there “wasn’t a hope in hell” of a comparable contract being signed nowadays, and called on Transport Infrastructure Ireland to publish a cost-benefit analysis of the scheme.

The committee also heard the projected total expenditure on PPPs for public works – such as transport, education and housing – are set to cost the State at least €9.6 billion over the life of their contracts.

While there is a requirement that all PPPs are subject to post-project cost-benefit reviews, members were told that – bar in one case – none of these have been published to date.

‘Extraordinary’

Fianna Fáil TD and committee chair Sean Fleming said it was “extraordinary” that only one such review had been published given the billions of euro involved.

He also said he was “exasperated” that no officials at the committee seemed to have read the only review published by the Courts Service into the delivery of the Criminal Courts Complex.

Sinn Féin deputy David Cullinane said senior officials had adopted a very “cavalier approach” and did not seem to be taking the issues seriously.

Following a suspension, during which committee members debated privately whether to continue with the meeting, Mr Watt rejected the accusation and insisted that all reviews will be published.

He said more information than ever previously disclosed on PPPs had been provided to the committee, and pledged to publish all post-project reviews.

Seán Ó Foghlú, secretary general of the Department of Education, said no post-project reviews have been completed into school building projects to date.

However, he said these reports were being tendered for and hoped the majority of this work would be completed within the calendar year.

In the meantime, he said a range of benchmark reports and other documents had been made available which provided key cost-benefit details.

Mr Watt said PPPs have been very useful in the past in facilitating the delivery of important infrastructure projects, particularly during the fiscal crisis.

However, with more normal economic conditions, he said they will play less of a role than they have done in the past.

“I don’t think PPPs will play as significant a role, but they do have a role to play. We are cautious about this type of finance.”