• Italy
- Long history of PPPs to finance and expedite surface transportation projects the government could not afford.
- Changes in legal framework in 2002 prompted further development of PPP approached to project financing and development for surface transportation infrastructure.
- National and regional governments in Italy have set up several companies whose focus is to promote and develop financing for large infrastructure projects.
- Most financing for Italian infrastructure PPPs has come from banks to mitigate the risks of delays between concession award and financial close, as well as delays in executing operation contracts.
- PPPs in Italy contain variable payment terms, which make payments contingent on project performance, although this is mitigated by including a fixed payment portion not subject to unavailability or performance deductions.
• Spain
- Long history of PPPs for surface transportation projects, mainly in for toll roads in the form of concessions since the mid-1990s.
- New concessions legislation in 2003 expanded use of PPPs to other infrastructure sectors.
- Early PPPs in Spain relied on bank loans but have since been converted to the capital markets offering lower-cost 30-year or longer terms.
- Spain has a 15-year (2005-2020) road improvement and network integration plan valued at €65B which is predicated on higher levels of private participation (25 percent) than in the past.
• Portugal
- In 1996, Portugal initiated a PPP program for highway development that consisted of seven shadow toll and seven real toll roads, of which a total of 10 concessions were awarded. One of the largest projects was the Second Tagus Crossing Bridge, which involved a 33-year DBFO concession that included operation of the original bridge across the Tagus River near Lisbon.
- New PPP legislation in 2003 required all new PPPs to transfer more project risk to the private sector partners and demonstrate value for money.
- Portugal's government has vacillated between the use of shadow tolls and user-paid tolls to fund its PPP concessions program for highway development. Recent efforts to move towards user-paid tolling for its PPP concessions slowed when concerns were raised regarding the credit implications of such a move on existing shadow toll-financed highways. In the end a mixed approach emerged, which authorizes the government-established public company that serves as the road national authority for road infrastructure in Portugal to determine whether a road concession will be paid by government-based shadow tolls or direct user-paid tolls.
- The planned highway to link the Portuguese capital Lisbon and the major city of Porto is an example of a PPP concession project that moved from shadow tolls to direct user-paid tolls. This project is scheduled for completion in 2008.
- Portugal's road PPPs are typically structured using the design-build-finance-operate (DBFO) model.
• France
- In the past, major new highway facilities were developed as toll roads by quasi-governmental entities which financed, developed, operated, and maintained the toll roads linking major urban areas of the country.
- Certain restrictions and public skepticism over PPP delivery of infrastructure projects somewhat curtailed further application of PPPs in subsequent years.
- In 2004, legislation passed which allows for private concession teams to use the DBFO PPP model to develop highways, with the contractor paid over time by the sponsoring public agency out of toll proceeds according to a pre-determined schedule.
- In 2006, these mature, quasi-governmental run toll highways were auctioned off to the highest-bidding concessionaires, providing a significant financial windfall for the country and the opportunity to use the proceeds to fund needed expansions and extensions to the nation/s highway system within the context of a more integrated European Union.
• Germany
- The major PPP initiative in Germany has been the Toll Collect project, which is an automated toll collection system developed specifically for this project. The Toll Collect system is aimed solely at heavy trucks (HGV) over 12 tons which use the highways in Germany. Prior to Toll Collect, many of these trucks originated outside the county (especially from Central and Eastern Europe) and could avoid paying to use the nation's highways by not buying fuel in Germany.
The development of this project involved a number of major companies from Germany and France that took major development risks in committing to a fixed delivery schedule despite the innovative nature of the project, in which new technologies had to be developed and successfully integrated before the system was able to go on-line. However after the initial problems with the system were corrected by the reconstituted development team, Toll Collect has itself become a highly successful PPP which will foster other surface transportation project PPPs through the additional revenues it is expected to generate..
- One PPP approach for developing new road infrastructure in Germany is the F-Model for new road construction. Two tunnels projects have used the F-Model with mixed results.
- Another PPP approach used in Germany is the A-Model, intended for road widening projects. These projects are intended to be funded from the proceeds for the Toll Collect project, whose two-year delayed opening in 2005 temporarily stalled use of the PPP A-Model. The pilot project for the A-Model approach is the A8 highway, between Ulm and Munich, whose construction was initiated in 2006. The 30-year PPP concession includes building and operating the facility, with payment to the concessionaire to be derived from tolls collected through the Toll Collect system from heavy trucks using the route.
- In 2005, the government announced five highway expansion projects would be done as PPPs using the A-Model, with the private sector concession teams responsible for financing, expanding, and operating the facilities. These projects will be paid for out of the proceeds from Toll Collect imposed on all trucks using the expanded highways. The government provides start-up financing to compensate the concession teams for the use of the expanded highways by automobiles and light trucks which are not tolled.
• Greece
- The Greek government has an active PPP program for financing and delivering transportation infrastructure, including major highways and bridges. A significant example is the Rhion Antirrion Bridge, a major cable-stayed bridge that links the Peloponnese to the Greek mainland across the westerns end of the Gulf of Corinth, near Patras. Project stakeholders included the concessionaire, lending banks, and the Greek Government. The bridge opened to traffic in 2004 after a 5-year construction period.
• Netherlands
- The Netherlands has limited PPP program for highway projects, with the first road PPP project contracted in 2003 for €218 million. This project involved the reconstruction of the PPS-A59 highway using a design-build-finance-maintain (DBFM) contract, which accelerated the project by four years and saved 14 percent from the original cost estimate. The reconstruction phase ending in December 2005 followed by a 15-year maintenance term that will end in 2020.
- More recent PPP initiatives include a tunnel and two more highway projects.
• Ireland
- Ireland has an active PPP Roads program which began in the late 1990s under the Irish National Roads Authority. Representative projects include a section of the N4/N6 Motorway between Dublin and Sligo/Galway which involves a 30-year concession for construction and operation of the highway extension between Kinnegad and Kilcock.
- Another PPP DBFO concession contract is being used to upgrade and expand the M50 Orbital Motorway (ring road) to the west of Dublin, including upgrading the Westlink toll plaza to a fully electronic free flow toll facility.
• Norway
- In the last several years, Norway began to use PPPs for expediting infrastructure development when it's Parliament (Stortinget) authorized three pilot road projects, the first of which is the E 39 highway between Kiett and Bardshaug. The second of the pilot PPP projects will link Grimstad and Kristians, while the third project will link Lyngdal and Flekkefjord. International firms with PPP experience have teamed with Norwegian contractors to pursue these projects.
- Norway's PPP pilot road program is aimed at helping to create a highway network that unites the country, provides improved accessibility and safety, and is sensitive to the environment.
- Norway's pilot PPP road program does not include direct tolling as a mechanism for funding the projects. Instead a variety of other funding sources are being used to fund and finance the projects on a case-by-case basis.
- The lack of tolling in Norway's PPP road pilot program is in contrast to the country's urban cordon toll ring program which charges vehicles a fee (toll) to enter an urbanized area defined by a cordon ring of tolling stations at highway and arterial points of entry. The program is designed to reduce congestion in dense urban areas through road access pricing while raising revenues to help fund highway and transit capacity improvements. The program currently operates in Cordon ring tolling began in Bergen and 1986 and is also operated in the capital city of Oslo and Trondheim.
• Sweden
- The ruling parties of the Swedish government generally oppose PPPs as a form of privatization coupled with private financing of infrastructure. In contrast, many municipalities in Sweden are interested in PPPs to expedite needed infrastructure projects they cannot currently afford to finance.
- PPPs could be done in Sweden under current legislation with adequate political support. One example where a public-public partnership was used to expedite a project was the Oresund Fixed Link, a multimodal tunnel and bridge that connects the Danish Capital of Copenhagen and the Swedish City of Malmö. The project was publicly financed, with development and operation handled by a joint-venture company owned by Sweden and Denmark. Opened in 2000, results of this project initially did not meet expectations in terms of projected traffic and revenue, due in part to cost of the tolls. However major traffic increases occurred in 2005 and 2006 as Danish citizens purchased homes in Malmö where they are much lower in cost and use the Oresund Fixed Link to commute to/from jobs in Copenhagen.
- Like its neighboring Scandinavian country of Norway, the prior Swedish national government allowed a demonstration PPP project to introduce cordon area tolling in the capital city of Stockholm in 2006. Although originally opposed by the residents of Stockholm and its surrounding suburban communities, the six-month demonstration project received sufficient popular support in a September 2006 referendum to warrant continuation.
- Continued commitment to the cordon are tolling project in Stockholm by the national government is uncertain since the composition of the Swedish legislature changed during the last elections and the party that campaigned against tolling and cordon area pricing that would support PPPs is now in charge.
• Denmark
- Like its neighbor to the north, Denmark is a sensitive topic for financing and delivering infrastructure projects. To address the concerns over what is perceived as a subtle form of outright privatization of the nation's infrastructure assets, the Danish government has developed the "Denmark Model" in which several public sector agencies combine to form a joint venture to deliver infrastructure projects using public financing.
- Denmark Model has been used to develop several mega projects which posed huge project and financial risks, even if the private sector could have bid on the projects as PPPs. Both projects provide multimodal links between Denmark and its neighboring countries by crossing wide bodies of water which have traditionally separated these land masses and been served only by ferry boats.
- The two public-public-partnership projects include the huge Store Belt Crossing (Great Belt Crossing) between the Danish islands of Zealand and Funen across the Great Belt, which opened to passenger rail traffic in 1997 and auto traffic in 1998, and the Oresund Crossing described above. Both projects toll automobiles and passenger trains, although the Danish Railways provided an up front payment for the Great Belt Crossing to help fund the early development costs of the project. For each project, the private sector role is focused on project design, construction, and inspection.
- A third mega-project, called the Fehmarn Sund, would have linked East Denmark with Germany and provided a direct highway and rail connection between Hamburg and Copenhagen. This project has been stalled for a number of reasons, including:
▪ Differences between the two sponsoring nations regard how to finance the project, with Denmark preferring the Danish Model of public joint venture funding and Germany preferring a government guarantee of private financing;
▪ Uncertain financial feasibility of the project;
▪ Strong opposition by environmental and local community groups on the German side of the project; and
▪ Concerns over lost jobs associated with the ferry services now crossing the Fehmarn Sund.
These considerations ultimately led both nations to back away from the project, for now. However, both nations have expressed the desire to begin the project by 2010 and open it by 2015.
• Finland
- Traditionally Finland used the design-bid-build approach to project delivery, but over the past five to ten years has increasingly used the design-build and other PPP project delivery approaches based on legislation that permits the use of PPPs to finance and develop infrastructure projects.
- In 1995, the Finnish government awarded its first long-term PPP contract for the extension of the M4 highway from the city of Lahti and Järvenpää. The PPP concession contract called for the private consortium to finance, construct, and operate the roadway over a period of fifteen years. The motorway was delivered five years sooner than by using conventional project contracting approaches.
- Ten years later in 2005, the Finnish government sponsored another long-term PPP concession contract for extending the E18 Motorway from Turku to Helsinki in southwest Finland. The E1 8 Motorway is an important part of the Trans-European Transport Network, otherwise known as the "Nordic Triangle." The Nordic Triangle links the Scandinavian capital cities to each other, from Oslo-Stockholm-Helsinki to the Russian border, and improves access to Central Europe. E1 8 is the busiest east-west corridor in Finland, carrying 60 percent of all international traffic in the country. The concession team is responsible for the design, financing, construction, and maintenance of the E18 extension (referred to as the Muurla-Lohja road project) over a contract term of 24 years. This is the first PPP roadway project in Finland to receive funding from the European Investment Bank (EIB), one of the largest European financiers of PPPs over the past 16 years. This reflects the increasing maturity of the PPP infrastructure market in Finland.
- The Ministry of Transport expects to use PPPs more in the future for both road and railroad infrastructure development projects to expedite their delivery schedules and reduce risks and costs to the state. Possible future projects include Main Road 6 and the Lahti-Luumäki railway.