The government has asked the Council of State how it would be possible to shorten “by a few years” the duration of the concessions of certain motorway companies, which have been more profitable than expected, said Wednesday the Minister of the Economy, Bruno The mayor.
The Mayor acknowledged before the Finance and Sustainable Development Commissions of theNational Assembly that the calculations of profitability for the shareholders made during the privatization of the motorways in 2006 had “not been good”.
As interest rates fell sharply, the concession companies – notably Vinci, Eiffage and the Spanish company Abertis – were able to repay their investment at a better cost, improving their profitability accordingly, while toll rates continued to increase regularly in accordance contracts concluded with the State.
“Avoid any annuity”
“We were wrong,” acknowledged the minister, before noting that the current rise in interest rates would no doubt require us to redo the calculations. “We will have to see the rate of return on the entire concession,” he insisted. Wanting to “avoid any rent”, Le Maire plans to “shorten the duration of the concessions (…) by a few years”. “This is the path that seems to us the most legally sound and economically the most promising,” he added.
He announced the publication on Wednesday evening of a report from the General Inspectorate of Finance (IGF) for February 2021 – recently found by Le Canard enchaîné -, which points to the profits made by ASF-Escota (Vinci) et AREE-Area (Eiffage), and goes so far as to mention the possibility of reducing their toll rates by almost 60% to “realign (their) profitability” with what was planned in 2006.
Early termination
The text, however, considers “legally conceivable” only a shortening of the duration of the concessions, which according to its authors “assumes a strong political will and would result in a deterioration of relations between the State and the SCAs”, the companies highway concessionaires.
The report envisages an early end to the concessions on April 30, 2026 for ASF and Escota, i.e. a shortening of ten and five and a half years respectively, and on September 30, 2026 for APRR and Area, i.e. a shortening of nine and ten years.
The State would run “the risk that the judge considers the profitability of the concessions to be reasonable and their early termination as entailing a right to compensation”, specifies the report. Hence the referral to the Council of State.
Renationalization ruled out
The minister transport delegate, Clement Beaune, noted that the lawyers of the Royal Palace should also study “all the tax options”, the government intending to put the motorway companies to contribute to finance the announced effort on the rail. The Mayor also wants, as suggested by the Transport Regulatory Authority (ART), that the new contracts be shorter, and include “a clause for revising toll rates according to the level of profitability”.
The two ministers did not hide their preference on Wednesday for a renewal of the current model of concessions – certainly fitted -, the Mayor rejecting any renationalization of the motorways which according to him would cost between 40 and 50 billion euros to the taxpayer.
While the main current concessions, covering more than 90% of the motorways granted, are due to expire between 2031 and 2036, Mr. Beaune announced the organization of “Assizes of the motorways” by the summer. “All questions will be asked about the future of concessions,” he guaranteed.