Revenue from toll roads dips into red

State revenue from public private road tolls will dip into the red this year, costing the tax payer an estimated €5.5m in support for toll operators.

National Roads Authority chief executive Fred Barry said cumulative revenue from the State's share of the PPP tolls had amounted to €2m by the end of 2011. But he said that would change this year, due to reduced vehicle numbers on the PPP network, a factor which he attributed in turn to the economic downturn.

The State only provides subsidies to two road schemes, the €1 billion M3 motorway in Co Meath and the €600m Limerick tunnel, where traffic volumes are significantly below guaranteed threshold levels.

Another poor performer is the Waterford toll road where Mr Barry said traffic volumes were below "anything" that was anticipated either by the NRA or the road builders. But he said the commercial risk there and in other loss making PPPs was "borne entirely by the PPP company involved".

Mr Barry said in the early days of PPP projects the private sector could be persuaded to take the whole risk in relation to traffic volumes, but as schemes became more complex road builders "took the first tranche of risk and we took a risk after that". He said in the current climate no road builder was prepared to take any risk on traffic volumes.

The revenue figures do not count the M50, the Dublin Port Tunnel or the East Link. Speaking at the Oireachtas Public Accounts Committee Mr Barry said the M50 and Port Tunnel were wholly owned by the State while the East Link was an partnership involving Dublin City Council. Traffic volumes on the M50 have continued to grow throughout the economic downturn and toll revenue has grown in response, he said.

Mr Barry also revealed State buy-out payments to the former owners of the M50 West-Link bridge dropped from €52m in 2009, to about €47m the following year because they were "index linked". The annual payments will continue until 2020, giving an overall cost to the State of some €600m.

Mr Barry was critical of the original M50 contract with the private sector and agreed with committee members it could be described as a "sweetheart deal". He said the State had got very little in the contract in terms of how the infrastructure was to be maintained. While there was an initial loss for the developer as traffic volumes were low, there was no provision for the State to share in the revenue as the volumes grew.

But he said the M50 West Link buyout was now being funded entirely from toll revenue which would have been going to the road's former owners, if the buyout had not gone ahead.

Mr Barry said NRA contracts were very different from the original M50 contract and were structured in such a way that should economic activity pick up next year, toll revenue would increase as a result.