Sacyr completes 45 percent sale of N6 Motorway Concession in Ireland
Sacyr, through its P3 unit Sacyr Concesiones, has agreed to sell its 45% stake in Irish motorway N6 to Bestinver Infra.
The 56-kilometer road improves connections in West Ireland. The National Route N6 in Ireland is a major road that connects Galway in the west of the country to Dublin in the east, passing through several towns and cities along the way.
Announced back in May, the value of this operation reaches €45 million, including the debt associated to the stake sold.
The sale of Sacyr Concesiones’ stake in the N6 is part of the company’s mature non-strategic or minority stake asset rotation policy.
The project started operating in 2009 and is under a concession scheme until 2037.
Motorway Concessions
A motorway concession, also known as a toll road concession or highway concession, is a contractual agreement between a government authority and a private company or consortium to develop, operate, and maintain a specific section of a motorway or highway for a predetermined period of time, typically several decades. These concessions are often used to finance, build, and manage transportation infrastructure projects while shifting some of the financial and operational risks to the private sector.
Here are eight key points about motorway concessions:
- Financing: One of the primary reasons for implementing motorway concessions is to secure private sector investment in the construction and maintenance of highways or motorways. This allows governments to avoid using public funds exclusively for infrastructure development.
- Construction and Development: Under a motorway concession, the private company or consortium is responsible for designing, building, and upgrading the road infrastructure according to agreed-upon standards and specifications. This can include expanding existing roads or constructing entirely new ones.
- Operation and Maintenance: The concessionaire is also responsible for operating and maintaining the motorway during the concession period. This includes routine maintenance, repairs, and ensuring the road is safe and efficient for users.
- Toll Collection: In many cases, the private entity is granted the right to collect tolls from users of the motorway as a means to generate revenue and recoup their investment. Toll rates and collection methods are typically outlined in the concession agreement.
- Duration: Motorway concessions typically have a fixed duration, often ranging from 20 to 50 years or more, during which the private company has the rights and responsibilities outlined in the agreement.
- Regulatory Oversight: Governments maintain regulatory oversight over the concession to ensure that the motorway is operated in accordance with safety and quality standards and that the interests of the public are protected.
- Transfer of Assets: At the end of the concession period, control of the motorway typically reverts to the government, along with any associated assets and infrastructure. This can vary depending on the specific terms of the concession agreement.
- Risk Sharing: Concession agreements often outline the allocation of risks between the public and private sectors. This can include risks related to construction delays, traffic volume fluctuations, and revenue shortfalls.
Motorway concessions are a way to leverage private sector expertise and capital to improve transportation infrastructure. However, they can also be a subject of debate and scrutiny due to concerns about toll rates, maintenance quality, and the long-term impact on public finances. Properly structured and regulated concessions can provide benefits in terms of infrastructure development and improved road networks while managing risks for both parties involved.
