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Funding for EN125 redevelopment due to be cut

After recently reducing the funding for the redevelopment of the Baixo Tejo and Litoral Oeste road concessions, the road authority Estradas de Portugal (EP) is now preparing to revise the redevelopment agreement of the Algarve Litoral concession, which comprises the Algarve roadways EN125, EN2, EN395 and EN270.

Considered one of the most complex cases, along with the Baixo Alentejo, the redevelopment work on both concessions was suspended a few months ago, not only due to lack of funding but also because the negotiations between EP and the various shareholders reached an impasse. This means that several road works were left unfinished, including the EN125, which has seen a huge increase in traffic due to the introduction of tolls on the A22 motorway.

In fact, according to data from the National Institute of Road Infrastructures (Instituto Nacional de Infra-estruturas Rodoviárias – InIR) released in late August, the traffic on the A22 motorway reduced by 50% in the first quarter of 2012, which means that the EN125 is much busier than in previous years.

Two weeks ago, the Secretary of State for Public Works Sérgio Monteiro urged the various shareholders of the Algarve Litoral and Baixo Alentejo road concessions to reach an agreement with EP regarding the contracts’ renegotiation.

According to the Portuguese newspaper Jornal de Negócios, the Government is planning to show the memoranda of the renegotiations to troika officials, who will stay in Portugal until September 10 for the country’s fifth evaluation.

Due to the bailout and in a bid to reduce public expenditure, the Government ordered EP, the public entity responsible for the maintenance of Portuguese roads, to renegotiate the redevelopment agreements made with seven road concessions, most of which were signed during the government of José Sócrates. The Government’s goal is to save more than €2bn over the next 30 years.

EP and a consortium led by Brisa closed a deal in August, which plans to slash the Government’s investment in the redevelopment of the Baixo Tejo concession by €240m. The Baixo Tejo road concession comprises roadways in the south of Lisbon, in areas including Barreiro, Trafaria and Caparica.

Besides Baixo Tejo and Litoral Oeste – whose contract was cut by €48m – EP also successfully renegotiated agreements with the concessionaires of Pinhal Interior, Ascendi and Auto-Estrada Transmontana, with the cancellation of most of the redevelopment work or with work being taken over by EP.