Fire-fighting in Spain

Spanish infrastructure developer Globalvia has started 2012 fighting to keep two of its Spanish concessions afloat, as lower-than-expected traffic, Spain’s ongoing economic crisis and disagreements with the relevant procuring authorities all took their toll.

In early January, the government of Valencia took over the concession for the regional Castellon Airport, citing unacceptable cost increases demanded by the banks backing the airport concessionaire, in which Globalvia owns 45 percent.

Long dispute

The move capped a long dispute that saw the Globalvia-led team denounce the contract, arguing that the procuring authority was failing to keep to its end of a bargain to compensate the concessionaire for low traffic numbers, preventing a much-needed refinancing.

Sources close to the concessionaire said that the success of Castellon Airport was dependent on the region developing tourism-related infrastructure around the airport, which it failed to do following the outbreak of the global financial crisis. So far, the authorities have refused to pay any indemnity to the consortium, turning the matter over to the courts.

The other troubled concession Globalvia is involved in via a 35 percent shareholding is a 114-kilometre highway connecting Cartagena to Vera, in the Murcia region. Known as the “ghost highway” in the local press, traffic has severely under-performed across the stretch, throwing the concession’s economic equilibrium into disarray.

Similar to Castellon Airport, traffic estimates for Cartagena-Vera were dependent on construction of a number of urban developments that the regional authorities failed to deliver on, leading the concessionaire to miss a €500 million refinancing deadline earlier this year.

As it stands, banks have given the concessionaire a stand-still until March, partly because the traffic problems affecting Cartagena-Vera are not unique. In fact, creditors have been talking with Spain’s infrastructure ministry to try and find a solution for the wider traffic problem affecting the economic balance of a dozen or so road concessions.

With over 90 percent of its portfolio located in Spain, Globalvia may have to brace itself for some more fire-fighting as the year progresses.