Private funding of toll roads falls well short of finance provided by exchequer

BACKGROUND: State contributions for toll motorway schemes were often much higher than private payments

LEVELS OF private funding for each of the State’s toll roads show “actual private funding” for many of the schemes were significantly below that provided by the exchequer.

Private funding of the M3 toll motorway in Co Meath, which the National Roads Authority said cost about €1 billion, was €328 million, according to documents released under the Freedom of Information Act.

Private funding for the Limerick southern ring road on the M7 was €256 million, compared to €390 million provided by the exchequer. The €390 million is broken down into €150 million for land and preparatory costs, €180 million during construction and €60 million in payments over the lifetime of the contract.

The documents also reveal the actual private funding of the Kilcock to Kinnegad toll motorway on the M4, was €195 million. The State’s contribution was €216 million, including land and preparatory costs. The private-sector funding of the Rathcormac to Fermoy toll motorway on the M8 was €123 million. According to the roads authority, the State contribution was a further €160 million, including land and preparatory costs.

The private funding for the N25 Waterford city bypass which includes the Suir bridge was €216 million. The State contribution to the overall cost was €321 million, including land and preparatory costs.

Private funding for the Galway to Ballinasloe scheme on the M6 motorway was €280 million, while the authority’s website disclosed the State pays €543 million. This was broken down as a payment of €136 million during construction, plus €270 million in land and preparatory costs, along with a further €137 million during the operational period of the PPP contract.

Private funding for the wishbone-shaped Portlaoise- Cullahill/Castletown motorway on the M7/M8 was €310 million. The exchequer contribution was €221 million. The roads authority broke this down into €144 million in land and preparatory costs, plus €44 million during construction and €33 million during the operational period.

Private funding for the M1 Dundalk western bypass was €139 million. Separately the authority said the State’s contribution was €40 million in land and preparatory costs. No further costs to the State are envisaged.

Phase two of the upgrade of the M50 secured a private-sector contribution of €267 million, according to the freedom of information papers. The roads authority has separately said the total cost of phase two was €650 million, giving an exchequer cost of €383 million. Phase two involved additional lanes and the rebuilding of junctions on the northern and south western sections of the motorway.

The toll agreements are generally in the order of 30 to 35 years but the M3 toll was set at 45 years from 2007. The toll operator is required to maintain the road over the period of the contract.

While the State has made agreements in a number of cases to make ongoing payments to toll operators throughout the life of the concession contract, it is also entitled to various levels of “revenue sharing” from toll receipts once specific thresholds for vehicle usage are achieved.

In two cases, relating to the M3 and the Limerick tunnel, the State has given guarantees of subvention should traffic volumes fall below anticipated levels.

However, the toll schemes have generally not proved a bonanza for either the operators or the State. According to the briefing note prepared for the secretary general of the Department of Transport, Tom O’Mahoney, many of the roads “recorded little or negative growth in 2009”.

The authority said the exceptions were the M50 and the Dublin Port Tunnel where growth was ascribed to the widening of the M50 and increased port traffic in line with export growth. The level of growth on these roads was about 10 per cent.