First Spanish road concession files for bankruptcy

After years of hanging in the balance, the concessionaire of one of Spain’s ten or so troubled highways has filed for bankruptcy with a Spanish regional court after incurring losses estimated at about €530 million.

A consortium of Spanish infrastructure firms Azvi, Comsa, Isolux Corsan, Sando and the investment arm of Portuguese bank Banco Espirito Santo (BES) – the concessionaire of the 71-kilometre AP 41 Madrid-Toledo toll road – has thrown down the towel after finding itself unable to pay debts of €380 million and some €150 million in right-of-way costs.

In a way, the AP 41 manages to contain all of the ingredients that have been plaguing Spanish road concessions for the last few years. To start with, it’s been suffering from much lower than expected traffic, with current traffic flows standing at a mere 6 percent of original estimates.

But the road has also been hit with higher than expected land expropriation costs, after Spanish courts sided with land owners and helped the AP 41 right-of-way bill almost triple from €54 million to €150 million. Finally, the AP 41 also had to contend with competition from a nearby freeway and the cancelling of one of its stretches.

In April, the Spanish ministry of Infrastructure (Fomento) extended a loan programme until 2021 designed to help re-balance road concessions hit by much lower-than-expected traffic since the outbreak of the global financial crisis. 

Fomento also set aside €600 million, or 19 percent of its budget, to tackle increased right-of-way costs. In comparison, the ministry intends to spend €873 million in 2012 to maintain its roads network.