The Limited Times

Now you can see non-English news...

Highways: a bonanza of 40 billion euros for shareholders

2020-09-18T08:08:02.964Z


A parliamentary inquiry report on highways published this Friday reveals that the profitability of concessions will be reached around 2022,


Are Historic Highways Concessionaires Making Too Much Money?

On reading the report of the commission of inquiry on "the control, regulation and development of motorway concessions" produced by the Senate, the answer is yes.

In this document of more than 300 pages, published this Friday, the fruit of a work launched in January which saw several ministers of Transport but also a Prime Minister, Dominique de Villepin - who signed the privatization of the highways in 2006 -, the senators were able to estimate the profitability of this privatization for shareholders.

And this one is particularly impressive, fueled by permanent toll increases.

According to their calculations, the main concessionaires like Vinci Autoroutes (ASF and Escota) and Eiffage (APRR and AREA) should reach their profitability around 2022. That is only 16 years after the privatization while the duration of the concessions must end as soon as possible. in 2031 and at the latest in 2036. "In other words, the duration of these concessions would be too long by around ten years", writes Vincent Delahaye, UDI senator from Essonne and author of the report.

Note that recent highways, whose concession periods are longer, are not taken into account in the study.

Tariff cuts at tolls?

It emerges from the document that between 2022 and 2036, the dividends paid would reach around 40 billion euros, including 32 billion euros just for Vinci and Eiffage.

Pharaonic sums that would be added to the 24.3 billion euros in dividends already paid since 2006 by the historic motorway companies ASF, APRR and SANEF.

“And again, to carry out this analysis, we took low growth assumptions of 1.5% whereas they have been 3.5% so far, details Vincent Delahaye, also vice-president of the Senate.

And even for 2020

(Editor's note: year of Covid-19)

we have assessed the drop in traffic at 25% when the motorway companies are counting on 20% ”.

One way to pull the rug out from under the dealerships who, upon reading the report, might find this estimate far-fetched.

This analysis, carried out on the basis of numerous documents accumulated, is valuable when we know that the motorway dealers, while refuting any excess profit, systematically take refuge behind trade secrets to remain opaque about their profitability.

"And yet, they are of course over-profitable", insists the parliamentarian.

Moreover, Vincent Delahaye urges the State to organize a highways summit which would be called "La Défense des autoroutes".

Objective, to recover part of these 40 billion euros for users.

Either through reductions in toll prices for clean vehicles, carpooling, public transport, but also for individuals who make home-work trips.

Either by investing more in infrastructure, for example by deploying electric recharging stations more quickly on motorway rest areas.

Or by increasing the financial participation of motorways in the financing agency for transport infrastructure in France (AFITF)

(Editor's note: more than 510 million euros per year currently).

Re-nationalization ruled out

However, it is difficult to imagine that the highways accept a drop in their profit: "I think the opposite," continues the senator.

A few years from the end of the concessions, the State has the means to put the pressure on.

"

Especially since this better sharing of the cake would be a fair turnaround for public finances.

The report estimates that the privatization, which brought in 14.8 billion euros to the State, should have brought in potentially 6.5 billion euros more.

“The cessation was done in two times, regrets Vincent Delahaye.

In 2002, there was a partial opening of the capital, then a privatization in 2006. It would have been necessary to sell in one go.

Vinci acquired 23% of ASF at 25 euros per share in 2002 while the share was worth twice as much three years later ”.

A significant 23% stake, which, according to the rapporteur, also had the effect of dissuading investors.

Thus, the differential between the floor price of ASF shares in 2006 and the price sold was only 6%, whereas it reached 20% for the other concessions.

Newsletter "It pays me"

The newsletter that improves your purchasing power

I'm registering

Your email address is collected by Le Parisien to enable you to receive our news and commercial offers.

Learn more

If the report rules out a renationalization of highways before the end of the contracts because of its cost to public finances - estimated between 45 billion and 50 billion euros -, it urges the State to prepare for the end of the concessions. And in particular to watch that the last years of the contract are not synonymous with reductions in investment, as it seems to be expected. If the concessions are finally renewed with new calls for tenders, they must not exceed a period of fifteen years, have a review clause every five years to prevent rent situations, and above all have a balanced contract with better profit sharing and a profitability ceiling. “The original sin of the highways comes from the fact that contracts which bound mixed economy companies and the State were transferred to the private sector without modifying them, regrets Vincent Delahaye. It is a costly mistake; "

Source: leparis

All business articles on 2020-09-18

You may like

Trends 24h

Latest

© Communities 2019 - Privacy

The information on this site is from external sources that are not under our control.
The inclusion of any links does not necessarily imply a recommendation or endorse the views expressed within them.