Spain unveils massive PPP spending schemes for roads, rail and water

(By Global Construction Review)

Updated: 2017-07-28 07:58:43

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Hailed as an “end to Spanish austerity”, the government of Spain has announced a €5bn public-private investment programme to build some 2,000km of roads over the next three years.

The work will include completing highways that were left unfinished after the financial collapse of 2008 and the modernising of motorways that have not received significant investment the past 20 years.

The roads schemes will be followed by high-speed rail and water infrastructure programmes.

The announcement of the “Extraordinary Road Investment Plan” was made by Prime Minister Mariano Rajoy in a press conference on Friday, 14 July. 

He added that franchisees would be responsible for the maintenance about 20 roads for the next 30 years. The procurement will be “part-private and part-public” investment, a route that he said had proved successful in other European countries.

Rajoy did not say whether the government was contemplating more toll roads, however reports in the Spanish press suggested that these were not being contemplated. In the past, these have not proved successful, and the government may buy back some loss making concessions in the Madrid area.

He added that the road building work would be followed by another two PPP investment programmes, one in high-speed rail and the other in water infrastructure. 

Íñigo de la Serna, the minister of public works, who was also present at the conference, had already mentioned the highway investment plan in his departmental budget, announced in April.

He said then that the government would look to the private sector to raise capital for the plans. Once the work is complete the government will repay the companies over a period of 30 years at a rate of no more than €350m a year. During this period the companies would be expected to handle maintenance. 

The Spanish government will also apply to the European Investment Bank for funding under the so-called European Junckers Plan. 

According to Rajoy the work will generate about 150,000 jobs in the first four years during construction and another 30,000 in the following period.  

Jaime Lamo de Espinosa, president of Spanish contractors’ association ANCI, hailed the end of Spanish austerity. He told El Periódico newspaper: “We’ve had practically a decade of brutal reductions to investment in public works to meet the deficit targets. And now we have an extraordinary road investment plan.”