Spain to tender €5.7bn of railway deals this year

Transport minister José Blanco finally unveiled the projects he intends to tender this year as part of his €17 billion public-private partnership programme. Railways amount to seven of the eight concessions to be tendered in 2010, worth a total of at least €5.7bn.

Spanish transport minister José Blanco unveiled a list of eight projects yesterday that he plans to tender this year as part of a two-year, €17 billion infrastructure public-private partnership (PPP) programme.

Blanco: full-steam ahead
on PPP programme

The announcement came almost five months after Blanco officially unveiled the €17 billion PPP stimulus back in April. Seven of the eight projects are railway concessions – including three stretches of high-speed rail – with a road refurbishment deal also included in the package. Blanco said the eight projects amounted to “more than a third” of the €17 billion plan, placing their total cost upwards of €5.7 billion.

Previously, Blanco had said that 70 percent of the €17 billion plan would be dedicated to rail infrastructure, including high-speed rail, suburban rail and freight rail. The seven rail projects to be tendered this year certainly reflect that diversity, with highlights including a rail line to Alicante airport, in eastern Spain, a freight rail link to the port of Algeciras, to the south of Spain, and a stretch of high-speed rail to the north of the country.

The sole road project to be tendered this year will require the refurbishment of a portion of highway A-66, connecting Benavente to Zamora, in the north of Spain, close to the border with Portugal. Road refurbishment projects will comprise the remaining 30 percent of the €17bn stimulus.

All of the projects tendered as part of Blanco’s PPP plan will be backed by availability payments. That means the private sector will not be exposed to demand risk on the rail and road projects and will instead receive annual public payments in exchange for making the assets available in good condition. The contracts that form part of the PPP plan will also require sponsors to pay for 20 percent of their cost in equity.

Four of Spain’s biggest banks – BBVA, Caja Madrid, La Caixa and Santander – have already pledged to take the lead in helping to finance these projects. But earlier claims from a local banker that the projects to be tendered would be kept to a manageable size of between €50 million and €300 million per tender seem to be contradicted by the figures Blanco unveiled yesterday.

At a total cost of €5.7 billion, the eight projects that the minister plans to tender this year have an average cost of €708 million per tender. And larger projects, the banker previously suggested, might require international bank funding, a potential problem, he added.

To find out more about Spain’s infrastructure plans, read our Iberian report in the September issue of Infrastructure Investor magazine.