By Ana Tavares [email protected]
After renegotiating the redevelopment agreements of five road concessions in a bid to cut public expenditure, national road authority Estradas de Portugal (EP) has now managed to reduce by €155 million the contract with the Algarve Litoral concessionaire.
The contract comprises the Algarve roadways EN125, EN2, EN395 and EN270 and includes the redevelopment work on the EN125. The signing of the new agreement took place on October 4.
Road works along the EN125 were suspended earlier this year due to the dire financial situation of one of the concession’s shareholders.
Signed in 2009, the contract for the redevelopment of the EN125 was granted to Rotas do Algarve Litoral, whose shareholders are Edifer, Tecnovia, Conduril, Dragados and Iridium.
The original agreement gave Rotas do Algarve Litoral the responsibility for the redevelopment of 273 kilometres of road at a total cost of €339 million.
With the renegotiation of the contract, the agreement was not only reduced by €155 million, but the construction of four road sections was cancelled and a new plan for the suspended works is to be announced.
The new settlement will reduce the amount coming from the government’s coffers by €110 million, cutting back on running expenses by €45 million and decreasing the amount of payments made to the concessionaire over the next 30 years, which is the period covered by the concessionaires’ contracts.
According to Estradas de Portugal, the government will save an estimated €500 million in payments to Rotas do Algarve Litoral through to the end of the concessionaire’s contract, in 2039.
As with most other agreements that have been renegotiated so far – Baixo Tejo (a saving of €241 million), Litoral Oeste (€48 million), Pinhal Interior (€485 million), Baixo Alentejo (€338 million) and Auto-Estrada Transmontana (€81 million) – 93 kilometres of maintenance work on roadways will be taken over by Estradas de Portugal from January 2014.
According to news agency Lusa, Estradas de Portugal said in a press release that the construction of new sections of road in Odiáxere, Olhão, Luz de Tavira and on the EN2 between Faro and São Brás de Alportel were removed from the contract with Rotas do Algarve Litoral – and therefore cancelled – and that the concessionaire will present a new plan for the redevelopment work of the EN125 within a month.
As part of the new memoranda agreed by both companies, Rotas do Algarve Litoral will now be in charge of the renovation works throughout the EN125, as well as adding new road sections in Lagos, Almancil/Troto, Faro and a new road connection between Guia and Albufeira.
Estradas de Portugal is the public entity responsible for the maintenance of the country’s roads, and this is the sixth redevelopment agreement ordered by the Portuguese government, due to renegotiations of troika’s bailout. So far, the government has saved more than €1.3 billion.
The original road concession contracts were signed between 2008 and 2010, during the government of José Sócrates.