How are we going to fund these wonderful Spanish highways?

In a few years many Spanish highway concessions will expire. In fact, some concessions already expired in 2018 and earlier in 2019, and there is a pressing need to rethink the infrastructure development model.

Historically, the construction of new infrastructures in Spain has been driven by economic growth and social competitiveness. The motorways that were built in the past required a very strong investment, which meant the participation of private ventures.

However, the current context has changed. The urgent need for the construction new Greenfield highways has given way to the need to maintain and upgrade the existing ones. Once the toll highways concession expires, the state will require to increase the budget to improve and maintain them… and I am afraid there won’t be enough budget for everything.

So, in this new context, we require a new financing model to tackle the key aspects that the current model can’t address:

  • Territorial balance: the new model should tend to be homogeneous, without penalizing or benefiting any territory, otherwise, it would be difficult to explain to the citizenship.
  • Economic sustainability: State resources are limited, and if it is dedicated to infrastructures, taxes will have to be raised or to reduce in other items, such as social expenses.
  • Cost allocation: who generates the cost has to bear it (including external costs, which nowadays, far from being compensated, are partially subsidized).

Personally, I would like a fully toll-free scenario, but unfortunately that wouldn’t be sustainable in the mid-term (given the public budget and maintenance programme), so soft-tolls represent the best alternative to ensure the upkeep and improvement of our infrastructure in an efficient way.

However, a few questions regarding soft toll highways should be carefully addressed:

  • Which infrastructures should be soft-tolled: all high-capacity network or only the expired concessions?
  • Which tariff schema should be applied for the network: homogeneous tariff (€/km/lane) for all the network or depending on each asset requirements?
  • To whom should soft-tolls be applied: light and heavy vehicles, type of trips, vehicle occupancy, based on pollution conditions…?

Technology is on our side, and new tolling systems are very reliable and flexible to implementing multiple strategies depending on different variables.


 

About the authors
César Valero is a Civil Engineer, holds an MBA, and Partner at ALG
For more insights, please check www.alg-global.com or contact:
cvalero@alg-global.com