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(Article) State paying €111,000 a week to toll road operators

  • 13-06-2011 11:05am
    #1
    Registered Users Posts: 2,091 ✭✭✭


    THE State has paid thousands to subsidise the toll operators of two of the country's new motorways.

    It comes as the National Roads Authority (NRA) has been told not to build any new roads because there is no money available.

    The NRA last night admitted it paid almost €1.8m over a four-month period last year to the private operators of the N18 Limerick Tunnel motorway and the M3 motorway in Meath.

    The money is being paid because the NRA guaranteed a certain number of vehicles would use each privately-funded road when they opened.

    Because the numbers have not always been reached, the roads authority has had to make up for the loss of tolls. And unless traffic volumes in the Limerick Tunnel and on the M3 motorway improve, the NRA faces the prospect of paying more than €5.7m in 2011 to the private operators.

    New figures show payments to the operators of the Limerick Tunnel between September and December last year amounted to €1.24m, while payments for the M3 Clonee-to-Kells motorway between October and December came to €547,000.

    This works out at an average of €111,000 per week.

    The NRA said the traffic guarantee was only in place on the M3 and Limerick Tunnel because they were expensive and challenging projects to deliver.

    A spokesman added the authority had been paid €1.47m last year by the operators of other motorways which were turning a profit, including the M1 to Belfast and M4 at Kilcock. "The way to attract bids with more competition is you offer a guarantee for high-risk jobs," NRA spokesman Sean O'Neill said. "This is called a debt-payment guarantee. The reason they're in these contracts is the size of the M3 and the complexity in building the Limerick tunnel. If you give this guarantee, you get more bidders and better prices."

    The Limerick Tunnel was built by a consortium called Direct Route (Limerick) Ltd, which includes one of the State's biggest building contractors, Sisk, and AIB.

    http://www.independent.ie/national-news/state-paying-euro111000-a-week-to-toll-road-operators-2672986.html

    I presume this will have a negative impact on the chance of PPP projects, even with added hard tolls, going ahead.


Comments

  • Closed Accounts Posts: 6,093 ✭✭✭Amtmann


    It might but then there are examples where other PPPs are now yielding handsome profits for investors, so it's likely decisions will still be made on a case-by-case basis.


  • Registered Users Posts: 2,091 ✭✭✭marmurr1916


    Tremelo wrote: »
    It might but then there are examples where other PPPs are now yielding handsome profits for investors, so it's likely decisions will still be made on a case-by-case basis.

    It's not just investors that will be taking note of these figure - it's the government too.

    The government might decide that the risk of a road not meeting the minimum traffic/revenue figures necessary to avoid subsidising toll operators is too high in the current economic climate.

    Investors will also take note of these results and will possibly demand higher subsidies and/or a lower minimum traffic/revenue figures before subsidies kick-in.


  • Registered Users Posts: 5,079 ✭✭✭fricatus


    Just a thought, but if we're going to pay this compensation, could we not just do a deal on shadow tolling on certain roads and do away with the barriers altogether?

    The best way of keeping the traffic from rat running through Limerick city centre would be to lift the toll. At least then the people there would see a benefit in terms of quality of life, etc., for the money that's being paid out.

    Same goes for Waterford. Hardly a sinner using the new bridge (around 5,000 a day IIRC) while Rice Bridge and the Quay/Ferrybank/Sallypark are congested all day (37,000 IIRC).

    Anyone got any idea whether the sums would stack up?


  • Registered Users Posts: 4,652 ✭✭✭serfboard


    Or another angle.

    If we are going to be paying compensation to these companies should we not be allowed to have an input into their pricing?

    Company X charges 2 EUR per car, and 6 EUR per truck. They only get 5,000 vehicles per day using the toll, and we make up the rest.

    But, if they were to halve their prices then they could double or treble the numbers going through, making our compensation less. However, they have no incentive to do so as we are going to make up the difference for them. This is crazy stuff - if we are going to pay compensation, then we should be able to influence their toll rates i.e. force them to lower the rates when the numbers using the toll are dropping.


  • Registered Users Posts: 2,013 ✭✭✭yayamark


    good idea

    Have them half price on fridays and bank holiday weekends

    Safer


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  • Registered Users Posts: 2,681 ✭✭✭Bards


    fricatus wrote: »
    Just a thought, but if we're going to pay this compensation, could we not just do a deal on shadow tolling on certain roads and do away with the barriers altogether?

    The best way of keeping the traffic from rat running through Limerick city centre would be to lift the toll. At least then the people there would see a benefit in terms of quality of life, etc., for the money that's being paid out.

    Same goes for Waterford. Hardly a sinner using the new bridge (around 5,000 a day IIRC) while Rice Bridge and the Quay/Ferrybank/Sallypark are congested all day (37,000 IIRC).

    Anyone got any idea whether the sums would stack up?

    Govt/NRA does not pay the Toll Operator (CRG - Waterford) compensation for the N25 Waterford City Bypass so you cannot compare this with Limerick where the NRA are compensating the Toll Operator for reduced utilisation


  • Registered Users Posts: 989 ✭✭✭MrDerp


    Umm.... that's only 5,720,000 euros per year.
    Over 40 years (that how long the agreement lasts?) that's 229m. Lets call it 300m to allow for inflation. For a massive motorway scheme and an expensive tunnel. Sure it's a lot of money, but what would these schemes have cost us outright? 600-700m? 1Billion? What does that look live over 40 years on the national debt at our current rates? What would it cost in maintenance? In the end we'll own these. Seems cheaper than building them (from a public purse perspective), still, if you ask me

    Sure, ideally the public would pay for these entirely, in the form of tolls. But hey, maybe the experience will highlight and cure us of parish-pump pork belly road building.


  • Registered Users Posts: 4,652 ✭✭✭serfboard


    MrDerp wrote: »
    Sure, ideally the public would pay for these entirely, in the form of tolls.

    In fairness, the public are paying for them entirely on most schemes.
    MrDerp wrote: »
    But hey, maybe the experience will highlight and cure us of parish-pump pork belly road building.

    Well, as long as Fianna Fail still exists, I wouldn't be so sure of that. Hopefully Fine Gael won't go down the same road - but if they do, they will deserve the same outcome as FF.

    I would agree with you about parish-pumpery in the case of the M3. This was built to get Noel Dempsey elected - who then didn't run anyway. A better idea would have routed the M2 off and saved building at least part of the scheme.

    However, I would disagree in the case of the Limerick Tunnel. Of course, I'm not in favour of the fact that we had to give a guarantee, and maybe a bridge could have been built instead, but I don't think you could describe this as parish-pump politics. This completed a bypass of one of our busy urban centres, and as an occasional user of it, I think it was a very worthwhile scheme.


  • Registered Users Posts: 5,785 ✭✭✭Chris_5339762


    Yeah when it came to timesaving, the Limerick Tunnel scheme saves more time than most, especially in rush hour it could save you up to an hour on bad days.

    That said, I reckon a bridge would have been better. Limerick port really doesnt need to exist and I guess it was the Parish Pump that demanded a tunnel rather than a bridge.


  • Registered Users Posts: 989 ✭✭✭MrDerp


    serfboard wrote: »
    In fairness, the public are paying for them entirely on most schemes.
    Ah yeah, I mean it's a good thing from a public finances perspective. I'm not too concerned about us having to chip in small amounts for these schemes. That was the deal.
    serfboard wrote: »
    Well, as long as Fianna Fail still exists, I wouldn't be so sure of that. Hopefully Fine Gael won't go down the same road - but if they do, they will deserve the same outcome as FF.

    I would agree with you about parish-pumpery in the case of the M3. This was built to get Noel Dempsey elected - who then didn't run anyway. A better idea would have routed the M2 off and saved building at least part of the scheme.

    However, I would disagree in the case of the Limerick Tunnel. Of course, I'm not in favour of the fact that we had to give a guarantee, and maybe a bridge could have been built instead, but I don't think you could describe this as parish-pump politics. This completed a bypass of one of our busy urban centres, and as an occasional user of it, I think it was a very worthwhile scheme.

    Argh. My bad, I meant the M3. I do see the Limerick Tunnel as a good scheme. It's regrettable that it's tolled. This, and the bla bypass should have been fully public schemes, in my opinion. These are vital bypasses for cities that need to grow, and should have been seen as an investment into the local economy.

    I'd much rather see tolls confined to inter-urbans, with shadow tolls or the aforementioned agreements picking up the slack where necessary. If anything, I prefer to see PPP on these shortfall schemes - at least then we know a private operator like NTR isn't completely creaming it.

    Off-topic, but my last feeling on tolls is that they should be completely free for licensed compliant hauliers, or at least at a better rate. I think it's retarded to want HGVs out of our towns but then hit them with heavy tolls to use motorways. At the same time, hauliers piss me off no end with their breakdowns, spilled loads, and contempt for their rules of the road.

    So I'd ban them through bypassed towns, and give them all transponders for free/cheap tolls. I'd then have the hauliers instead pay a few hundred euro every 6/12 months to have their trucks checked for (1) speeding via the tachograph (and tampering thereof) (2) service records. Non-compliance, or failure to test, results in immediate change to the account status for that truck and the rate for that truck gets beefed up to the previous punitive rate.


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  • Registered Users Posts: 5,079 ✭✭✭fricatus


    MrDerp wrote: »
    I think it's retarded to want HGVs out of our towns but then hit them with heavy tolls to use motorways.

    QFT

    MrDerp wrote: »
    ...the bla bypass...

    It's blaa boy, but I'll let you off this time because I LOL-led ;):D


  • Registered Users Posts: 2,091 ✭✭✭marmurr1916


    According to the IT, the NRA is paying almost €6 million per year in compensation to the operators of the M3 and Limerick tunnel toll concessions:
    NRA figures recently revealed that the State is currently paying almost €500,000 a month to the private operators of the M3 motorway and the N18 Limerick Tunnel because traffic volumes have fallen short of anticipated levels.

    The payments, which amount to an annualised €5.9 million, are more than four times the authority’s revenue share from all its other public-private partnership toll motorways.

    Just two such roads constructed over the past decade at a cost of €8 billion are returning a payment to the State – the M1 and the M4.

    However, the combined revenue here was just €1.47 million in 2010, the latest year for which figures are available.

    Of course, those figures don't take into account toll revenues from the M50 and there's no mention at all of the revenues from the M6, M7 or M8 tolls.

    The revenue figures for the N25 Waterford bypass toll aren't give either, although at least the report acknowledges the existence of this toll.

    Anyway, it seems that the NRA want to add a toll to the M9 and to put extra tolls on other sections of the M50.

    The possibility of tolls on other routes (eg - N/M18 - Limerick to north of Gort, Jack Lynch Tunnel, N4 Dromod bypass!) is mentioned but many of these will hopefully not come to pass:
    The National Roads Authority is seeking advice on the potential to raise additional revenue from new tolls on existing roads.

    The move follows the compilation of a study last year which recommended extending tolls on Dublin’s M50 and placing a second toll on the M9/N25 Dublin to Waterford route.

    The authority placed a request for consultancy advice on the Government’s etenders website today. It is also seeking advice on how to maximise current revenue from its three directly-controlled toll operations.

    These include the M50, the Dublin Port Tunnel and its “central clearing house” which provides for interoperability of toll tags among different tolled roads.

    The etendering notice says the clearing facility handled toll transactions with a value of €90 million in 2010.

    The NRA is understood to be ambitious to broaden the scope of the M50 tolling scheme from a single point, near the West Link bridges, to a pay-as-you-go system which would bring in huge numbers of other motorists who use parts of the M50 but do not cross the Liffey.

    There is no toll on the M9 between Dublin and Waterford but there is a toll on the Suir Bridge which connects the southern end of the M9 to Waterford City. It is understood the NRA believes a toll on the northern section of the route would bring the motorway into line with other inter-urban motorways.

    Other roads which have been previously mentioned as having the potential for tolls include the Jack Lynch Tunnel in Cork and a range of bypasses such as Youghal and Ballincollig in Co Cork, parts of the N52 around Tullamore, Co Offaly, and the Limerick to Tuam section of the Atlantic corridor.

    The M17/18 Gort to Tuam scheme is one of three future public-private partnerships currently at development stage, but which are not currently envisaged as toll schemes. The other two are the N11 Arklow to Rathnew and N7 Newlands Cross combined scheme; and the M11/N25 Enniscorthy and New Ross bypasses.

    A second toll on the N4, near Mullingar, would require development at level crossings at the Downs near Mullingar, while significant additional land would be required to build a toll plaza on the Roosky/Dromod bypass.

    A number of the potential tolls would be difficult both practically and politically and Minister for Agriculture Simon Coveney expressed trenchant opposition to suggestions that the Jack Lynch Tunnel might be tolled, when he was Fine Gael transport spokesman last year.

    http://www.irishtimes.com/newspaper/breaking/2011/0718/breaking44.html


  • Moderators, Business & Finance Moderators, Motoring & Transport Moderators, Society & Culture Moderators Posts: 66,540 Mod ✭✭✭✭L1011


    Of course, those figures don't take into account toll revenues from the M50 and there's no mention at all of the revenues from the M6, M7 or M8 tolls.

    The revenue figures for the N25 Waterford bypass toll aren't give either, although at least the report acknowledges the existence of this toll.

    The NRA are probably not getting revenue share on the M6/7/8 and definitely aren't on the N25 yet. The older contracts which were made public detailed the traffic figures and for the first considerable block there is no revenue sharing (other than the state getting 21% VAT of course).

    It eventually ratcheted up to about 80% NRA / 20% concessionaire when the traffic figures were close to saturation for the road design IIRC.


    I was going to ask the question about whether the revenue share was possibly covering the M3/N18 payouts; I've got my answer anyway.


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