Call for Renegotiation of Toll Road Contracts – Like Portugal

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PRESS RELEASE – 7 JULY 2013

‘Call for Renegotiation of Toll Road Contracts – Like Portugal’

TaraWatch is calling on the Minister for Transport to renegotiate the terms of concession agreements with tolling companies for the M3 Motorway and the Limerick Tunnel, and to publish the contracts. It says the Minister should examine how Portugal renegotiated similar contracts in 2010.

The Minister has a duty to protect the taxpayer from having to pay toll companies e30 million under a ‘shadow tolling clause’ in the agreements, over the next 3 years, under minimum traffic guarantees secretly granted by the National Roads Authority (NRA) in 2006/7. That could amount to over e300 million over the next 30 years.

In 2006, the then Minister for Foreign Affairs, Dermot Ahern, secretly received special permission from the European Commission to insert the minimum traffic guarantees into the M3 and Limerick tunnel, which would otherwise be considered state aid, in breach of EU competition law. Permission was granted on the basis that the roads on the basis that they were “necessary” for “regional development.”

The EU noted “private investors would not have accepted to take on the risk of the two projects without the construction payments, the operating payments and a guarantee from the government in respect of traffic volume. This was due to the already low traffic predictions in 2006.

However, the NRA withheld this information from the public consultation and the M3 Draft Tolling Scheme and oral hearing in 2007, and has refused to publish the M3 contract. It has recently removed the M3 Draft Tolling Scheme from its web site.

Renegotiation of concession contracts by governments occurs frequently. According to EUROSTAT:

“In April 2011 and after consultation with EUROSTAT, Portugal decided to reclassify three motorway contracts, which were originally off the government’s balance sheet, to make them on-balance sheet. All three projects had originally been structured under shadow toll schemes some years ago and were then subject to renegotiation with the same partners in April 2010.”

Law lecturer, Vincent Salafia, of TaraWatch, said:

“Minister Varatkar must renegotiate the onerous terms of these agreements, in accordance with international best-practice.

“The Government promised “burden-sharing” in its election campaign and programme for Government, but placed the burden on the public alone.

“It is untenable for this Government to cling to costly agreements made by the previous government, in different times, under questionable circumstances.

“The public has a right to know the exact terms of these agreements, and how much will be spent, so the Minister must publish them immediately.

ENDS

EUROSTAT: New Eurostat rules on contracts

EUROPEAN COMMISSION:  Traffic guarantee for M3 Clonee to North of Kells and N7 Limerick Southern Ring Road Phase II

NATIONAL ROADS AUTHORITY – M3 Draft Toll Scheme should be here

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