IDEAS home Printed from https://ideas.repec.org/a/eee/trapol/v114y2021icp78-87.html
   My bibliography  Save this article

Bankrupt PPPs: Is it really so bad? Case study of R-3 and R-5 toll motorways in Spain

Author

Listed:
  • Alcaraz Carrillo de Albornoz, Vicente
  • Sánchez Soliño, Antonio
  • Lara Galera, Antonio
  • Isabel Álvarez, José Miguel

Abstract

PPP projects that go bankrupt come to early termination and are usually considered a complete failure. While it is true that this outcome is catastrophic for the project shareholders and creditors, it may not be the case for other relevant stakeholders, such as the granting authority, users and society as a whole. Assessing the global outcome of the project requires several detailed ex-post analyses, such as financial analysis, cost-benefit analysis and value for money analysis. Unfortunately, these analyses are seldom performed. To illustrate this point a case study was analysed: the PPP contract for two toll motorways (R-3 and R-5) and a segment of a ring road (M-50) in the vicinity of Madrid, Spain. The results show that the cost of the project to the Government, although higher than estimated on the pre-feasibility study, will be significantly lower than the first and hasty estimates. The project, despite a lower demand than initially expected, is still highly beneficial to society. Finally, using a PPP for this project has allowed the Granting Authority to avoid risks that have materialized with an important cost.

Suggested Citation

  • Alcaraz Carrillo de Albornoz, Vicente & Sánchez Soliño, Antonio & Lara Galera, Antonio & Isabel Álvarez, José Miguel, 2021. "Bankrupt PPPs: Is it really so bad? Case study of R-3 and R-5 toll motorways in Spain," Transport Policy, Elsevier, vol. 114(C), pages 78-87.
    • Handle: RePEc:eee:trapol:v:114:y:2021:i:c:p:78-87
    DOI: 10.1016/j.tranpol.2021.09.007
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0967070X21002729
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.tranpol.2021.09.007?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Daniel Albalate & Paula Bel-Piñana, 2016. "Winners and losers in tolled motorway renegotiations: an empirical evaluation of the Spanish pioneers," Public Money & Management, Taylor & Francis Journals, vol. 36(5), pages 365-372, July.
    2. Timur Narbaev & Alberto De Marco & Nurlan Orazalin, 2020. "A multi-disciplinary meta-review of the public–private partnerships research," Construction Management and Economics, Taylor & Francis Journals, vol. 38(2), pages 109-125, February.
    3. Kelly, Charlotte & Laird, James & Costantini, Stefano & Richards, Phil & Carbajo, José & Nellthorp, John, 2015. "Ex post appraisal: What lessons can be learnt from EU cohesion funded transport projects?," Transport Policy, Elsevier, vol. 37(C), pages 83-91.
    4. Carpintero, Samuel & Gomez-Ibañez, Jose A., 2011. "Mexico's private toll road program reconsidered," Transport Policy, Elsevier, vol. 18(6), pages 848-855, November.
    5. Eduardo Engel & Ronald Fischer & Alexander Galetovic & Ginés de Rus, 2015. "Colaboración Público-Privada en infraestructuras: Reforma del sistema concesional español de autopistas de peaje," Policy Papers 2015-11, FEDEA.
    6. Louis Grange & Felipe González & Shlomo Bekhor, 2017. "Path Flow and Trip Matrix Estimation Using Link Flow Density," Networks and Spatial Economics, Springer, vol. 17(1), pages 173-195, March.
    7. Huanming Wang & Wei Xiong & Guangdong Wu & Dajian Zhu, 2018. "Public–private partnership in Public Administration discipline: a literature review," Public Management Review, Taylor & Francis Journals, vol. 20(2), pages 293-316, February.
    8. Alejandro Ortega & Maria de los Angeles Baeza & Jose Manuel Vassallo, 2016. "Contractual PPPs for Transport Infrastructure in Spain: Lessons from the Economic Recession," Transport Reviews, Taylor & Francis Journals, vol. 36(2), pages 187-206, March.
    9. Wardman, Mark & Chintakayala, V. Phani K. & de Jong, Gerard, 2016. "Values of travel time in Europe: Review and meta-analysis," Transportation Research Part A: Policy and Practice, Elsevier, vol. 94(C), pages 93-111.
    10. Robert Bain, 2009. "Error and optimism bias in toll road traffic forecasts," Transportation, Springer, vol. 36(5), pages 469-482, September.
    11. Grout, Paul A, 1997. "The Economics of the Private Finance Initiative," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 13(4), pages 53-66, Winter.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Baños-Pino, José F. & Boto-García, David & Zapico, Emma, 2022. "Persistence and dynamics in the efficiency of toll motorways: The Spanish case," Economics of Transportation, Elsevier, vol. 31(C).
    2. Spohr, Jonas & Wikström, Kim & Ronikonmäki, Niko-Matti & Lepech, Michael & In, Soh Young, 2024. "Are private investors overcompensated in infrastructure projects?," Transport Policy, Elsevier, vol. 152(C), pages 1-8.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Vicente Alcaraz Carrillo de Albornoz & Antonio Lara Galera & Juan Molina Millán & Belén Muñoz Medina, 2023. "Public–Private Partnerships: Left or Right Government Economic Policy?," Public Organization Review, Springer, vol. 23(4), pages 1523-1544, December.
    2. Roberto Moro-Visconti, 2021. "Networking Digital Platforms and Healthcare Project Finance Bankability," Sustainability, MDPI, vol. 13(9), pages 1-18, April.
    3. Jiangang Shi & Kaifeng Duan & Guangdong Wu & Rui Zhang & Xiaowei Feng, 2020. "Comprehensive metrological and content analysis of the public–private partnerships (PPPs) research field: a new bibliometric journey," Scientometrics, Springer;Akadémiai Kiadó, vol. 124(3), pages 2145-2184, September.
    4. Zapico, Emma & Baños-Pino, José F. & Mayor, Matías, 2024. "Optimal toll rates accounting for traffic accidents: A productive efficiency approach," Transportation Research Part A: Policy and Practice, Elsevier, vol. 181(C).
    5. David Martimort & Flavio Menezes & Myrna Wooders & ELISABETTA IOSSA & DAVID MARTIMORT, 2015. "The Simple Microeconomics of Public-Private Partnerships," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 17(1), pages 4-48, February.
    6. Anna Matas & Ginés de Rus & Stef Proost & Salvador Bertoméu-Sánchez & Antonio Estache, 2018. "The Financing of Infrastructure / La financiación de las infraestructuras / El finançament de les infraestructures," IEB Reports ieb_report_1_2018, Institut d'Economia de Barcelona (IEB).
    7. Galilea, Patricia & Medda, Francesca, 2010. "Does the political and economic context influence the success of a transport project? An analysis of transport public-private partnerships," Research in Transportation Economics, Elsevier, vol. 30(1), pages 102-109.
    8. Baños-Pino, José F. & Boto-García, David & Zapico, Emma, 2021. "Persistence and dynamics in the efficiency of toll motorways: The Spanish case," Efficiency Series Papers 2021/03, University of Oviedo, Department of Economics, Oviedo Efficiency Group (OEG).
    9. Maria Börjesson & Jonas Eliasson & Mattias Lundberg, 2014. "Is CBA Ranking of Transport Investments Robust?," Journal of Transport Economics and Policy, University of Bath, vol. 48(2), pages 189-204, May.
    10. Laird, James J. & Venables, Anthony J., 2017. "Transport investment and economic performance: A framework for project appraisal," Transport Policy, Elsevier, vol. 56(C), pages 1-11.
    11. Sanko, Nobuhiro, 2020. "Activity-end access/egress modal choices between stations and campuses located on a hillside," Research in Transportation Economics, Elsevier, vol. 83(C).
    12. Walker, Joan L. & Chatman, Daniel & Daziano, Ricardo & Erhardt, Gregory & Gao, Song & Mahmassani, Hani & Ory, David & Sall, Elizabeth & Bhat, Chandra & Chim, Nicholas & Daniels, Clint & Gardner, Brian, 2019. "Advancing the Science of Travel Demand Forecasting," Institute of Transportation Studies, Research Reports, Working Papers, Proceedings qt0v1906ts, Institute of Transportation Studies, UC Berkeley.
    13. Casady, Carter B. & Gómez-Ibáñez, José A. & Schwimmer, Emily, 2020. "Toll-managed lanes: A simplified benefit-cost analysis of seven US projects," Transport Policy, Elsevier, vol. 89(C), pages 38-53.
    14. Odeck, James, 2019. "Estimating and predicting the operational costs of road tolls: An econometric assessment using panel data," Transportation Research Part A: Policy and Practice, Elsevier, vol. 130(C), pages 466-478.
    15. Kenneth Button & Brien Benson, 2013. "Handling biases in forecasting when making transportation policy," Chapters, in: Thomas Vanoutrive & Ann Verhetsel (ed.), Smart Transport Networks, chapter 4, pages 49-67, Edward Elgar Publishing.
    16. Luo, Lanlan & Zou, Ziran & Chen, Shou, 2021. "Discounting for public-private partnership projects in China," Economic Modelling, Elsevier, vol. 98(C), pages 218-226.
    17. Miranda Sarmento, J. & Renneboog, L.D.R., 2014. "Public-Private Partnerships : Risk Allocation and Value for Money," Other publications TiSEM b9218010-a357-4c0a-805a-7, Tilburg University, School of Economics and Management.
    18. Kingsley Adjenughwure & Basil Papadopoulos, 2019. "Towards a Fair and More Transparent Rule-Based Valuation of Travel Time Savings," Sustainability, MDPI, vol. 11(4), pages 1-19, February.
    19. Filipi Nikol & Karlínová Bára & Krčál Ondřej, 2022. "The disutility of driving below the speed limit on highways," Review of Economic Perspectives, Sciendo, vol. 22(4), pages 267-277, December.
    20. Paul Timms & Miles Tight & David Watling, 2014. "Imagineering Mobility: Constructing Utopias for Future Urban Transport," Environment and Planning A, , vol. 46(1), pages 78-93, January.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:trapol:v:114:y:2021:i:c:p:78-87. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/wps/find/journaldescription.cws_home/30473/description#description .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.