International Construction Law Review
TOLL-ROAD FUNDING ALTERNATIVES EMERGE FROM THE SHADOWS
ANDREW CHEWAND*
DAVID STORR*
Special Counsel, Mallesons Stephen Jaques
Partner, Mallesons Stephen Jaques
The global toll-road industry is facing new challenges, arising partly from a shortage of long-term debt and equity funding following the global financial crisis, and partly from a re-evaluation of traffic and other risks in the sector. The convergence of capital market instability, refinancing commitments, reduced traffic volumes from the economic downturn and business and consumer sentiment will cause a bumpy road ahead for new toll-road projects.
This article discusses traditional direct user fees and some possible new debt and equity funding models in Australia in the context of the current difficulties.
Direct user fees across the globe
Toll-roads are used in at least 46 countries across Europe, North and South America, Asia and Australia.1 A variety of ownership structures and revenue arrangements exist.
In Italy, private motorway operators build, operate and maintain the networks and cover their expenses from the tolls they collect. In Portugal, certain roads have a fixed value per kilometre charge regulated by the government, with several classes depending on vehicle type. In the United States, there are toll-roads, bridges and tunnels in 32 states,2 with many states again implementing tolls to fund capital improvements and manage congestion (post completion of the Interstate Highway System established in 1956).
*Andrew Chew is a Special Counsel and David Storr is a senior Partner in the Sydney office at Mallesons Stephen Jaques. Andrew Chew has acted for the successful bidders for the Eastlink (Victoria), North-South Bypass Tunnel (Queensland) and Westlink (NSW) motorways since 2003, and for various other tollway bidding consortiums including the Peninsula Link (Victoria). David Storr was the lead partner for the successful consortium on the projects mentioned above, and also on the M2 Motorway, Eastern Distributor (NSW) and others. The authors wish to thank Mark Fairlie, solicitor, for his assistance with this article.
1 National Surface Transportation Infrastructure Financing Commission Report, 2009, p. 1309 (hereafter Report 2009), http://www.ibtta.org/Information/content.cfm?ItemNumber=3732
2 Report 2009, p. 129.
Pt 1] Toll-Road Funding Alternatives
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