What factors will determine the price and the role of tolls. Investment interest is increasing

With the first half of 2023 as a milestone for the submission of binding offers, the Hellenic Republic Asset Development Fund – HRADF is proceeding with the new concession of the Attica Road. Yesterday’s announcement of Intrakat’s 30% stake in the BRISA – AUTO ESTRADAS de PORTUGAL – RUBICONE BIDCO scheme that is vying for the axis further strengthens the investment map for one of the most valuable assets of the privatization programme.

HRADF’s big bet is to complete the delivery of the infrastructure in October 2024, i.e. with the completion of the existing highway concession contract. As the Fund’s sources comment, this will strengthen its credibility towards prospective investors and deter the scenario of extending the existing contract.

Certainly in view of the following election year, all sides are aware that there may be delays in the progress of the procedures, while the schedule will also be affected by the number of comments submitted by the participants. However, the structure of the competition is such as to avoid arrhythmias. Contributing to this was the choice not to enter the tender for heavy construction, which by experience would have fueled oldd rivalries, hampering the process.

The difference of opinion on tolls

The posting on the competition’s Virtual Data Room of the draft of the 700 page concession agreement revealed the amount of tolls of the new concession. Essentially, the estimated toll revenue is a determining factor for the bids submitted by interested investors.

Setting the fee at €2.50 per crossing, compared to the current €2.80, ended a debate over the introduction of tiered tolls. This was a proposal presented by the management of HRADF in the summer, a higher charge for peak hours and a lower one for the rest of the hours are preferred. The main argument was to decongest the axis during peak hours, when there is already an increased load, thus making off-peak times more attractive.

It is noted that the outlook for traffic in Attica and the greater Athens metropolitan areain the coming years is not optimistic. As traffic has increased not only on major thoroughfares, but even in neighborhoods, and rush hours have been extended, the problem is expected to intensify. Attiki Odos is not expected to be an exception. Of course, important projects are expected that will contribute to alleviating the problem, such as the new Line 4 of the metro and the extensions of Attica Road, but these are a permanent, but long-term solution.

The disagreement of the Ministry of Infrastructure and Transport with the proposal of graduated tolls was made clear by the statement of the Minister Mr. Kostas Karamanlis, last week. After confirming that the new tolls will be set at 2.50 euros, he emphasized that “the Government’s decision to reduce the Attica Road tolls in the new contract is not only part of the broader effort to address the cost of living, but also closes a cycle of opinions about graduated tolls, without a transport study”.

What will determine pricing?

The conundrum concerning tolls has been solved for those directly concerned, but the reduction of the fee inevitably raises questions about the level of the bids that will be submitted. Since toll collections are the main and dominant revenue for the concession, the new pricing policy will be a determining factor in the amount of bids.

And the authorities may be reassuring, arguing that the reduction in the price of tolls is not expected to affect the price, but everything will have to be assessed in the light of the new macroeconomic environment. High inflation and rising interest rates are putting pressure on investment decisions internationally. Uncertainty is not a conducive environment for investment.

Of course, Attiki Odos remains the most profitable freeway in the country. It is by all accounts a success story. In fact, traffic during the first half of the year almost returned to pre-pandemic levels. Daily vehicle crossings are estimated at 230,000, very close to 2019 levels and up from 210,000 in 2021. However, it remains to be seen whether this will keep candidates’ expectations of future performance high.
However, more than a few argue that the forecasts for a price that will reach or even exceed 2.5 billion euros, will have to drop lower.

Strong interest

It is recalled that eight schemes have expressed interest in the 25-year concession of the axis. Concession and fund management companies from Italy, France, Spain, Portugal, the Netherlands and Australia, along with the large Greek groups. The initial absence from the equation of Intrakat was, as expected, “corrected” in the second phase, as was also foretold.

The company’s participation with 30% in the existing scheme BRISA – AUTO ESTRADAS de PORTUGAL – RUBICONE BIDCO was announced yesterday during the General Assembly by the vice president and managing director of Intrakat, Mr. Alexandros Exarchou.

The remaining seven schemes are as follows: ABERTIS INFRAESTRUCTURAS, GRUPPO FININC – INC SpA, GEK TERNA – FS ARK HOLDCO, VINCI HIGHWAYS – VINCI CONCESSIONS – MYTILINEOS – MOBILITY PARTNER, AKTOR CONCESSIONS – AVAX – ADRIAN INFRASTRUCTURE, MACQUARIE ASSET MANAGEMENT MOTORWAY HOLDINGS – FINCOP INFRASTRUCTURE and VAUBAN – DIF – EGIS.

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