Government to monetise motorways through concession for management and maintenance

The government on Thursday adopted a monetisation model for Croatia's public debt for the national motorway authority - Hrvatske Autoceste (HAC) and the Autoceste Rijeka-Zagreb (ARZ) - through the issuance of a concession for the management and maintenance of motorways for a period of 30 to 50 years which foresees a one-off allowance of between EUR 2.4 to 3.2 billion, depending on the duration of the concession.
 

Initial discussions with potential bidders should be over by the year's end after which non-binding offers will be accepted, negotiations conducted and then binding bids submitted which means that the entire procedure should be completed within 9 - 12 months, Minister of Maritime Affairs, Transportation and Infrastructure Sinisa Hajdas Doncic said on Thursday.

Asked by reporters during a press conference after the government session whether investors have already shown interest, the minister said that consultants had received 47 responses from various investment and pension funds, road management and construction companies and even from domestic pension funds interested in founding a consortium and competing for the concession.

He described that consultants had come up with five models including the privatisation of motorways, however, the concession model was selected which had attracted the most interest on the market.

The concession entails the obligation to manage and maintain motorways and charge tolls, the price of which would be regulated by contract and one of the possible models is to allow indexation on par to the inflation rate less one percent.

Should it prove to be necessary due to a significant increase in traffic, the concessionaire would be obliged to construct a third lane on the Zagreb-Karlovac leg of the motorway.

The model envisages a risk distribution between the concessionaire and the state which is pretty much known as it would be based on the current volume of traffic only in the summer months on already existing motorways.

The concession would apply to the entire length of the motorway (1,024 kilometers) with the option of an additional 30 km yet to be constructed and in no way can be issued for only certain profitable sections of the motorway, Hajdas Doncic underscored.

One of the fixed variables will be to retain the HRK 0.60 excise tax per litre on petroleum products which will then finance other infrastructure projects like the railways and state roads.

The concessionaire would also be obliged to retain all current employees which should not be a problem, Hajdas Doncic explained as staffing has already been downsized to European standards.

He reiterated that this move was vital because HAC and ARZ had over EUR 4 billion in debts which cannot be rescheduled

He stressed that the one-off payment would be used exclusively to reduce the public debt and by no means for current consumption.

(Hina)
 

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