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Trakiya Motorway concession would have a significant fiscal and macroeconomic effect in Bulgaria.
submited on 13.06.2005 in category Political stability | Fiscal affairs | Regulated markets | Privatisation | Macroeconomic developments
submited on 13.06.2005 in category Political stability | Fiscal affairs | Regulated markets | Privatisation | Macroeconomic developments
Privatization and deregulation in Bulgaria are often subject to obstacles imposed by the Judiciary. From the recent history we know that, although the formal justification of the judicial intervention is always check of procedures and their consistency with the law, in most of the situation expediency is the leading argument.
The Trakiya Motorway concession is new for Bulgaria’s roads management and financing. This is an alternative to the current model of totally public financing. The difference between the current status quo and the concession are significant: under concession, investments are private and the concessionaire runs the motorway business pursuing a reasonable return on the invested capital.
The major macroeconomic effects of that public-private partnership are following:
• the concession frees a resource for public investments equal to all expected public investments in the sector of transport and telecommunications throughout 2006-2009, which is about 12% of the total public investments.
• the investment needed to the completion of the highway is nearly five times larger than the necessary public capital for reconstruction of the rest of the road network.
• the private financing of the investment would allow the use of the EU funds for investments in other roads in the country.
• if the state finances the project via new debt, this would raise the public debt by some 9.3%.
The concrete concession contract resembles similar projects in other European countries, taking into account price level differences. The EU motorways total 53,000 km and for more than half of those the customers would pay a toll fee. Tolls for cars vary significantly: from 0.02 euro/km in Greece to 0.08 euro/km in France and Spain. The average price in the twen EU countries that apply the toll system is 0.06 euro/km. Meanwhile trucks are supposed to pay two to three times more.
According to European Commission data, in average price for the construction a kilometer of motorway in EU-15 is some EUR 6.8 million, while in the ten new members it is EUR 9.1 million.
The Trakiya Motorway concession is new for Bulgaria’s roads management and financing. This is an alternative to the current model of totally public financing. The difference between the current status quo and the concession are significant: under concession, investments are private and the concessionaire runs the motorway business pursuing a reasonable return on the invested capital.
The major macroeconomic effects of that public-private partnership are following:
• the concession frees a resource for public investments equal to all expected public investments in the sector of transport and telecommunications throughout 2006-2009, which is about 12% of the total public investments.
• the investment needed to the completion of the highway is nearly five times larger than the necessary public capital for reconstruction of the rest of the road network.
• the private financing of the investment would allow the use of the EU funds for investments in other roads in the country.
• if the state finances the project via new debt, this would raise the public debt by some 9.3%.
The concrete concession contract resembles similar projects in other European countries, taking into account price level differences. The EU motorways total 53,000 km and for more than half of those the customers would pay a toll fee. Tolls for cars vary significantly: from 0.02 euro/km in Greece to 0.08 euro/km in France and Spain. The average price in the twen EU countries that apply the toll system is 0.06 euro/km. Meanwhile trucks are supposed to pay two to three times more.
According to European Commission data, in average price for the construction a kilometer of motorway in EU-15 is some EUR 6.8 million, while in the ten new members it is EUR 9.1 million.
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