Spanish Road Project heading for bankruptcy (in Ireland)

Story emerging in Galway that the Ballinsloe to Galway tool road is heading for bankruptcy or at the very least for some serious restructuring.

The majority stake is as I understand owned by Globalvia. Globalvia is a vehicle set up as some class of investment fund into which the parent ( FCC) could offload projects that it had constructed. FCC/Globalvia are individually rather large, Globalvia claims to have a huge amount of roads under long term concession worldwide.

FCC/Globalvia are under a lot of scrutiny over some of their Spanish 'investments. Notable among them is the Cartagena - Vera AP7 where a motorway was built through a sparsely inhabited desert area and is unsurprisingly not carring enough traffic to pay off its debts. Unsurprisingly it went bankrupt early this year and I am sure that FCC and/or Globalvia have provided adequately…in my opinion the road is worthless and costs more to maintain than the low traffic numbers can cover…parts were even washed away last year in flash floods.

When Cartagena - Vera AP7 went bankrupt with debts of €550m it was carrying around 3k movements a day for a gross income of perhaps €20k a day or €7m a year. That’s a gross yield of sligtly over 1%. Genius what!!!

This week the same geniuses of infrastructure finance have admitted that another of their globally diverse portfolio is somewhat underwater. This is the Ballinasloe-Galway motorway. The motorway carries a decent whack of traffic but not as much as originally predicted. Somewhere around 12k movements, income north of €30k a day or €10m a year and debts of perhaps €250m to start with.

independent.ie/irish-news/lo … 37524.html

This is mad…they cannot charge someone €1.90 just to skip Ballinasloe

Not as big a shortfall as on the AP7 Cartagena - Vera road :slight_smile:

I’ll say they have.

The EIB is a preferred creditor so that means, in effect, that some Spanish Infrastructure Financing genius will take the wipeout…all of it. The Spanish went buck mad on infrastructure and gave us Ghost Motorways and Ghost Airports by the shedload , Even Top Gear showed a tour of ghost infrastructure in Spain only a week back…involving cars of course. :slight_smile:

Globalvia wrung a concession out of the authorities where they can charge tourist prices on another of their concessions ( Malaga - Marbella) from June to September. That now costs €7.30 a trip and for only 30 miles if that. Wow. In fact Globalvia like the cash cow so much they increased their stake in it in Februrary…from a partner on Ballinsaloe - Galway and all.

surinenglish.com/20130624/ne … 41127.html
infrapppworld.com/2013/02/global … iones.html

The Spanish came very late to the party here and were involved in perhaps 5 motorway projects at most ( out of around 35) right at the peak. Shame they had no idea how to price risk eh!!! Anyway, they’ll make some of it back on the M50 where they also have a concession.

Interesting, thanks, at least its a decent road and not a bridge to nowhere like their Spanish projects, love cruising down to Galway in less than 2 hours.

Is this not a rare example of Paddy getting a very good deal?

These Spaniards must be a laughing stock at all the trade conferences.

didn’t the irish government underwrite the traffic levels?

From Indo article linked to above

Traffic levels were not underwritten on this one. Only the Limerick Tunnel ( until 2020) and the M3 ( forever thanks to Dempsey) have minimum guaranteed traffic levels below which the government underwrites the revenue shortfall. The likes of the M4 PPP east of Kinnegad pull in near enough €100k a day, I’d say €80k at least which is well north of €20m a year.

It is also thanks to Globalvia that the government cannot introduce any more tolls on the M50 between Sandyford and Dublin Airport. Globalvia widened/upgraded that road on a shadow toll basis in the period 2005-2009 you see.

Globalvias shadow toll is pretty linear according to traffic and if the government ‘deliberately’ reduces the traffic they will find themselves in court for massive damages…well into the €100s of millions. Globalvia also made the shortlist for the two main PPP projects under negotiation in recent years ( Newlands cross and Gort- Tuam) but did not come in the top two consortia eventually selected for either project.

Naturally the government can pay Globalvia €100s of millions (cash upfront) to BUY the right to introduce M50 tolls, innit. :slight_smile:

That this might be a problem was obvious at an early stage.

The traffic volumes around that toll bridge are very low. From Loughrea in to Galway traffic is heavy but most of these cars are not going through the toll bridge.

Driving through the toll bridge on a sat/sun afternoon and you can be the only car about, max one or two others. In the wee hours the road is empty.

If they put a toll in between Loughrea/Athenry and Galway I will just use the Craughwell road, much to the disappointment of the residents living in that area.

Long toll prices, Short property near national roads.

[edit] - it wouldn’t be so bad if the Guards were not continuously on that stretch their with their speed cameras so you can’t go much faster that the national road anyway.

Increase the speed limit to 150km/h and I would pay the €1.90 to save some time.

Hey, so long as we’re not on the hook for this, I say leave everything the way it is. Not my problem.

Or they could just make the tolls for commercials, trucks and buses cheaper than for cars…Their numbers would go right up…The only possible reason I can come up with is an increase maintenance costs?

This won’t end well, we’ll end up with a stretch of poorly maintained inter-urban. The sensible thing would be for the NRA (or whoever is ultimately responsible) to buy them out of their contract, at a reduced price (they take a loss) and take over the maintenance using the toll for funding.

If the toll company was not maintaining the road could the NRA not just take over the road? No point in having PPP if the private part isn’t pulling their weight and no point in buying something if you can get it for free.

They charge now about 2 euro per crossing and AFAIK they control road from Oranmore exit to Ballinsloe west exit with two exits Loughrea & Athenry in middle. If they charged 65 cents per exit they would charge 1.95E per trip to Dublin like now but they also might catch some commuter traffic from Loughrea (1.30 per trip) or from Athenry (0.65 per trip) without forcing too many people by charging 1.90E everyone.

Wouldn’t the Loughrea traffic just use the old Craughwell road? There does not seem to be much difference in time and distance. I guess my point is that putting moe tolls in will disperse the traffic onto different routs defeating the point of having the road in the first place. They decided to put the toll where it is for a reason, the fact it is loss making is tough luck. you can bailout every poor investment or rewrite the rules every time an investment goes bad.

If they are bound by contract then yes they should be allowed to go bankrupt, if they can put tolls on whole PPP section that it would make sense to charge commuters. Currently a lot of cars that use PPP section are not paying at all.

The M6 saves at least 10km and 40 to 50 min travel time
Don’t know why anyone would avoid the toll, the scenery is not exactly spectacular

FCC took a large hit when their subsidiary Alpine Bau went bust last month in Austria with liabilities of €2bn ( minus whatever limited rescue package the government will stump up in Austria)

Alpine Bau were grossly overexposed in east europe where EG the Poles kicked them off half finished jobs they had financed up to then.

Bit cheeky of FCC to think we will make up their losses in Austria/Poland and parts east. The NRA should learn whatever the Polish is for ‘Shag Off’ for the next time FCC/Globalvia come calling looing for the digout. :frowning:

BTW this was Austrias biggest corporate collapse in 60 years as well.