The overall costs of Public-Private Partnerships with roads in Portugal are expected to suffer a slippage of more than 50% in the period from 2025 to 2040 (the last year foreseen for all contracts currently in force), following the approval, this week, of a Socialist Party bill to end tolls on several ex-SCUT (old roads designed to be free of charge for users).
The project generally passed with votes in favor from PS, Chega, Bloco de Esquerda (BE), Partido Comunista Português (PCP), Livre and People-Animais-Natureza (PAN).
The government parties (PSD and CDS) voted against and the Liberal Initiative abstained.
According to the government, this measure, foreseen in the PS electoral program, should cost the 2025 State Budget around 180 million euros. According to the PS’s calculations, it is less, less than 160 million.
In any case, Pedro Duarte, the Minister of Parliamentary Affairs, warned that the impact of the measure has a much greater reach.
“The problem is that it doesn’t have an impact just in one year. According to our estimates, by the end of the ex-SCUT toll concession period, in 2040, the value is 1.5 billion euros”, stated the government official , on Thursday, in statements to journalists, in Parliament.
According to still provisional data obtained by DN/Dinheiro Vivo (DV), this value in additional charges for road PPPs adds to the net cost (discounting revenues that would revert to the State), which should amount to 2.8 thousand million euros from 2025 to 2040.
With the measure now approved by the opposition against the wishes of Luís Montenegro’s government parties, the overall road PPP bill is expected to rise to 4.3 billion euros. This gives the aforementioned increase of more than 50% (53%, to be more exact).
Road PPPs are and have always been the heaviest in budgetary terms, worth almost 75% of the total contracted under a system of sharing risks, revenues and costs between public and private companies.
In addition to roads, the State has active PPPs in the railway sector, airports (ANA), Health and also in the Lisbon Oceanarium.
The approval of this measure, yet another in spite of what the PSD-CDS minority government intends, will cause more pressure on public expenditure, of course.
This is because several Public Finance analysts were counting on relief from these PPP charges in the coming years, which may not happen now.
Remember that even the previous Minister of Finance, Fernando Medina, had a lot of faith in the end of the cycle of losses for the State with these PPPs, having planned in his OE 2024 to establish a Fund for Structuring Investments that could begin to be used at from the end of the Recovery and Resilience Plan (PRR), in 2026.
This fund would be “financed with funds from positive budget balances and other sources, such as road concessions”. The mechanism would be mainly aimed at supporting “private public investments” and the idea was that it would start with a base of at least 2 billion euros.
Neither the new leader of the PS, Pedro Nuno Santos, nor the current prime minister, wanted to take advantage of the idea of such a fund, from Medina.
Now, the increase in charges that could be triggered by the opposition’s winning proposal is already confusing the accounts for 2025 and even future governments, as it disrupts the financial flow of PPPs until 2040, at least.
According to Lusa, in the PS project, tolls on the A4 – Transmontana and Túnel do Marão, A13 and A13-1 – Pinhal Interior, A22 – Algarve, A23 – Beira Interior, A24 – Interior Norte, A25 – Beiras Litoral and Alta and A28 – Minho in the sections between Esposende and Antas and between Neiva and Darque.
According to the same agency, BE’s proposal aims to eliminate tolls for highways accessing interior regions (A22, A23, A24, A25, A28, A29, A41, A42). The PCP wants to eliminate payments in A4, A13, A22, A23, A24, A25, A28, A29, A41 and A42.
