Public Private Partnership renegotiations have led to a reduction in charges to the taxpayer of 11.8%, but the deals have been altered to shift road repair liabilities onto the State.
The Technical Unit of Budget Support has warned that there are “costs and potential revenue losses” incurred as a result of the renegotiation of nine PPP road contracts, mostly signed under the Sócrates government as a way of borrowing immense sums of money that did not show up on the government accounts.
Reduction talks began in December 2012 with the Passos Coelho government aware of the anger surrounding the PPP agreements which guaranteed high fixed interest rates over the term of the loans.
The net savings so far are estimated 11.8% of total, or €1.176 billion, says the Technical Unit in an explanatory note to its review of these pernicious PPPs.
However, taking into account the financial impact of the new payment models for major road repairs and the loss of income from tolls on the Beira Interior which has been transferred to a private partner (€414 million and €495 million respectively) "the estimated net savings are €1,176 billion.”
The Passos Coelho Government had set as an objective a reduction of gross charges on all the road PPP contracts of 30%, a gross savings of €2.9 billion but got nowhere near as many of the companies funding the agreements, and benefitting from fixed interest rates often in double figures, also were close to the centre of government and held political influence.
The renegotiation process had been a con as the taxpayer has picked up the liability for fixing these PPP roads. Other ‘renegotiated’ contracts have shown an annual saving only because the repayment term has been extended by up to three years.
Also, handing over the toll revenue in exchange for better PPP terms can not really be classed as a 'successful renegotiation.'
The Unit says it did encounter some reticence from those it was relying on to supply financial information so it is not yet working with a full set of data.
There also are seven PPP renegotiations that have not been completed with two concession holders reducing charges voluntarily.
In terms of value, this is Big Business 10 - taxpayer zero.
