The role of the discount rate in tendering highway concessions under the LPVR approach.

Flexible-term highway concessions are becoming quite popular around the world as a means of mitigating the traffic risk ultimately allocated to the concessionaire. The most sophisticated mechanism within flexible-term concession approaches is the least present value of the revenues (LPVR). This mechanism consists of awarding the concession to the bidder who offers the least present value of the revenues discounted at a discount rate fixed by the government in the contract. Consequently, the concession will come to an end when the present value of the revenues initially requested has been eventually reached. The aim of this paper is to evaluate the effect that the discount rate established by the government in the bidding terms has on the traffic-risk profile ultimately allocated to the concessionaire. To analyze this effect, a mathematical model is developed in order to obtain the results. I found that the lower the discount rate the larger will be the traffic risk allocated to the concessionaire. Moreover, I found that, if a maximum term is established in the contract, the lower the discount rate, the less skewed towards the downside will be the traffic-risk profile allocated to the concessionair

Subordinated Public Participation Loans for Financing Motorway concessions in Spain.

Budgetary constraints are prompting many governments to encourage private financing of transportation infrastructure through concession contracts. The length and complexity of such contracts often force governments to provide fiscal support in order to increase the attractiveness of concessions. This paper deals with a new public support mechanism for concession contracts, called Subordinated Public Participation Loans (SPPLs), which has been implemented in Spain during the last few years. SPPLs are subordinated loans that may be given by the government to the concessionaire if the latter requests them in the tender. SPPLs are defined in such a way that the increase in interest accrued will reflect the traffic level: the larger the traffic the larger will be the SPPL yield. SPPLs have a twofold goal. First, they increase the financial attractiveness, and hence the feasibility, of concessions contracts. And second, they set up a fairer risksharing approach between the public and the private sector. This paper analyzes the implications of SPPLs in motorway concessions by contrasting the theoretical analysis with the empirical results obtained form the tender of five motorway concessions in Spain. Overall we found that the implementation of this mechanism may be considered a success. In spite of that, we propose some measures that may contribute to improving the SPPL performance in the future

Financing urban transport through value capture.

The Green Paper on Urban Transport highlights the importance of promoting public transport as a means of achieving better sustainable mobility. Unfortunately, budget resources are often constrained. On the other hand, literature points out that transport infrastructure induce economic impacts in the areas where they are placed. This effect is caused by the fact that people realize the positive effects of accessibility and want to live or work close to transport stations. Regarding this fact a question arises. Is it possible to capture the value induced by the construction of a new infrastructure facility as an additional financial source? The aim of this paper is to analyze different direct and indirect mechanisms of value capture to fund transport infrastructure

Traffic Risk in toll motorway concessions in Spain: An analysis of the ramp-up period.

This paper analyzes the behaviour of actual traffic versus the traffic declared by the concessionaire in its offer in toll motorway concessions in Spain during the first few years of operation (ramp-up period). We obtain the result that, on average, there is a clear bias towards overestimation though the behaviour of any single concession may not have much to do with the average. In addition, we found that unlike what happens with annual traffic volumes, traffic growth rates are mostly underestimated by concessionaires in the ramp-up period. We explain this trend towards overestimation in the strategic behaviour of the bidders in the tender rather than in systematic modelling errors. The cause of this strategic behaviour lies in the willingness to renegotiate as shown by the government of Spain when actual traffic turns out to be lower than expected

The effect of the discount rate in highway concessions awarded under the LPVR approach.

Flexible-term highway concessions are becoming quite popular around the world as a means of mitigating the traffic risk ultimately allocated to the concessionaire. The most sophisticated mechanism within flexible-term concession approaches is the Least Present Value of the Revenues (LPVR). This mechanism consists of awarding the concession to the bidder who offers the least present value of the revenues discounted at a discount rate fixed by the government in the contract. Consequently, the concession will come to an end when the present value of the revenues initially requested has been eventually reached. The aim of this paper is to evaluate the effect that the discount rate established by the government in the bidding terms has on the traffic-risk profile ultimately allocated to the concessionaire. To analyse this effect, a mathematical model is developed in order to obtain the results. I found that the lower the discount rate the larger will be the traffic risk allocated to the concessionaire. Moreover, I found that, if a maximum term is established in the contract, the lower the discount rate, the less skewed towards the downside will be the traffic risk profile allocated to the concessionaire

La política de pago por uso de infraestructuras en la Unión Europea

Este artículo analiza la evolución de la política de tarificación por uso de infraestructura a los vehículos pesados en la Unión Europea, describe los pasos llevados a cabo para su aplicación, y valora la puesta en marcha de esta medida en diferentes países de Europa. Sobre la base de la experiencia actual, el artículo plantea un conjunto de recomendaciones para que la aplicación de una política de pago por uso de infraestructura sea una medida justa y efica

Flexible-Term Highway Concessions. How Can They Work Better?

As the European Union¿s transport policy is developing, the idea of establishing a shared approach to the management of transport flows in particularly environmentally sensitive areas has gained support. This idea was born from the experience gained in the Alpine region, then translated to other transnational mountainous areas (the Pyrenees) and finally expanded to coastal regions and urban areas. This paper reviews how the ¿transport sensitive area¿ (TSA) concept has matured. This is followed by a discussion on the practical use of the concept and the key concepts on both, the identification of a TSA and the policy instruments for transport policy and regulation that could be applied. A practical case-study (the Pyrenees region) serves to illustrate the effectiveness, barriers and further developments needed. It is concluded that formalizing the concept of TSA would facilitate the institutional cooperation, which is needed to intervene in regions where several Authorities are involved. Furthermore, a comprehensive approach to mobility within/ through those areas seems to be necessary in order to avoid unexpected results. However, the extension of the concept to other contexts (particularly urban areas) seems to duplicate already existing instruments of coordination, and thus introduce further confusion in an already over-regulated environment. Modeling may greatly facilitate the complex decision-taking process involving multiple local, regional and national authorities, and facilitate consensus on a long term vision, thus mobilizing resources to develop alternative, environmentally-friendly infrastructure (in this case, a new rail crossing)

The impact of the structure of the economy on the evolution of road freight transport: a macro analysis from an input-output approach

Understanding the link between transport and the economy has been of the greatest concern among researchers and practitioners. This research explores the impact of the economic restructuring processes in the aggregate road freight transport demand. We develop a simulation exercise of two alternative economic scenarios over the period 1999–2011 in Spain and the UK by means of an extended Input-Output model. This approach allows us to calculate the elasticity range of vehicles-km to GDP depending upon the types of economic activity developed in these countries and their dematerialization level. The results confirm that the transition to more service-oriented economies implies much lower transport requirements, as has been the case in the UK. Furthermore, the comparison of the two countries has contributed to highlight the importance of other set of non-economic variables, related to technological, logistics and modal factors in the definition of final road freight transport demand

Inversión en infraestructuras: Cuando lo público y lo privado se dan la mano

Basándonos en datos de seis economías de América Latina, así como de España, destacamos el importante papel que la inversión privada ha tenido en el crecimiento de los países estudiados. Una vez puesto de manifiesto cómo la actual crisis económica global fuerza a la austeridad presupuestaria, proponemos el desarrollo de medidas que permitan mantener un esfuerzo inversor creciente perfeccionando las fórmulas de colaboración público privada ya existentes en los países en estudio