The second quarter of 2010 saw a slow pick-up in the French construction industry as a number of core infrastructure projects moved through the pipeline, according to a new report from Business Monitor International (BMI), the business information firm.
The report adds that a faster recovery was held back by the harsh winter months, and particularly by Xynthia, a violent storm which crossed France in late February. As orders have accelerated in recent months, BMI sees a narrow turnaround of the construction industry’s 6.17 percent contraction in 2009. It predicts that the industry will be lifted into marginal growth in 2010 of 0.41 percent.
Transport projects are tipped by BMI to represent almost 77.5 percent of all infrastructure investments in the country this year as the sector grows by more than 7 percent to just over €25 billion of projects. The report also says that transport’s share of the overall infrastructure market will increase by around 1 percent year-on-year until 2014, when it will account for more than 82 percent of the total.
However, the report adds that the most recent quarter presented a mixed picture for big-ticket rail PPPs. On one hand, Sud Europe Atlantique, the country’s first major high-speed rail concession, was awarded; on the other, the major tram-train project on the island of Reunion collapsed.
The report says that the Reunion collapse highlights the level of political risk from local government opposition to concessions. Although Reunion was the most dramatic example, the report points out that there have been numerous delays in other rail projects. These include the Nimes-Montpellier bypass, which was slowed by lengthy negotiations between regional and national government over funding allocations.
The report also notes that competition is set to increase in France’s power sector as the government opens up the market and eases the control of EDF, the world’s largest utility. It says energy infrastructure projects will account for 22.5 percent of France’s total infrastructure investment value in 2010.