A public-private deal to improve toll roads
An upfront payment of $2.85 billion will allow highway authority to pay its debt
By Richard Gutiérrez
It is no secret that Puerto Rico’s roads, toll highways included, are in rather poor condition. This is in part because the island has a huge debt on its shoulders and cannot afford to fix all the roads as quickly as is needed.
That is why Gov. Pedro Pierluisi Urrutia, along with Puerto Rico Public-Private Partnership Authority (P3A) Executive Director Fermín Fontanés Gómez and Puerto Rico Highways & Transportation Authority (PRHTA) Executive Director Edwin Gonzaléz Montalvo, announced on Tuesday the selection of Abertis (Metropistas) for the improvement, financing and maintenance of toll roads PR-20, PR-52, PR-53 and PR-66. The contract is a public-private partnership (PPP) agreement between PRHTA and Abertis for a 40-year term.
The concession contemplates an upfront payment of $2.85 billion to the PRHTA, which will allow it to cover the payment of its debt, and a private capital investment of over $2.37 billion to modernize and improve the infrastructure, quality and safety of the island’s toll roads.
The selection of Abertis, the officials said, is the result of a rigorous procurement process that began in 2022 with the objective of providing Puerto Rico with a reliable highway system, in a state of good repair and safe for drivers, capable of supporting the economic growth and development of the island. This will be accomplished through a PPP mechanism that will allow the improvement of the budgetary and fiscal certainty of the PRHTA, in accordance with the public corporation’s certified fiscal plan.
“My commitment and that of my administration to the reconstruction and modernization of our infrastructure are known to all,” Pierluisi said at a press conference. “The renewal of our physical environment is going full steam ahead, and it includes the development, construction, maintenance, and expansion of permanent road construction projects; the electrical grid; the aqueduct and sewage system; and in our schools, as well as projects of decent housing for our people, especially for those who need it most. That is why today we announce this important step forward for the improvement of our toll roads throughout the island. After a rigorous and competitive study, bidding and analysis process, the Government of Puerto Rico has selected the company Abertis to carry out the financing, repair, design, construction, maintenance and operation of the PR-52 highway, Autopista Luis A. Ferré; PR-53, José Celso Barbosa Highway; PR-66, Roberto Sánchez Vilella Highway; and PR-20, Rafael Martínez Nadal Expressway, under a public-private partnership agreement with the Puerto Rico Highways and Transportation Authority under Act 29-2009.”
González Montalvo noted that “together with the P3A, we undertook the task of looking for solutions to improve safety standards, service levels and the quality of infrastructure for the toll roads, and to address the PRHTA’s existing debt.”
“After an exhaustive study, we concluded that the best solution was to establish a public-private partnership with an operator that has proven experience and the financial capacity necessary to reach our objectives,” he said.
As part of the process established by the Public-Private Partnership Authority Act (Act 29-2009), the P3A conducted a Desirability and Convenience (D&C) Study that analyzed various options to address the island’s toll roads situation with the objective of improving the budgetary and fiscal situation of the PRHTA; modernizing and improving existing infrastructure; improving mobility, accessibility and safety of users; improving operational performance; increasing revenue opportunities through reduced leakage; optimizing fare collection and better aligning toll rates to costs; and accelerating toll road improvements.
The D&C study concluded that a PPP that covers all four toll roads currently under PRHTA management is the most appropriate mechanism for the project, because it provides the private capital investment necessary to bring those roads up to world-class standards in the quickest and most efficient way in order to benefit all users.
Fontanés Gómez, the P3A chief, said “the selection of Abertis is the culmination of an extensive, competitive and transparent 19-month process that involved a rigorous study of several options to achieve the project’s objectives within the fiscal limitations of the PRHTA.”
“Today we formalize a path to execute the improvements that our infrastructure needs, in the hands of a private company that not only has extensive global expertise in highway operations, but also has extensive experience providing an excellent product and service here in Puerto Rico,” he added.
Puerto Rico TollRoads LLC, a subsidiary of Abertis Infraestructuras S.A., will be the entity that will sign the PPP agreement and will operate on the island under Metropistas. Abertis is a multinational company dedicated to the management of road transportation infrastructure around the world. Currently, the company operates and manages the PR-22 and PR-5 toll roads and the Teodoro Moscoso toll bridge.
For years, the PRHTA has faced administrative, operational and fiscal challenges -- including debt, funding restrictions and shrinking budgets -- that have made it difficult to carry out effective planning for toll roads, maintain them in a state of good repair and provide a reliable road network. The situation has resulted in old and deteriorating infrastructure that is not up to par with the operational standards of the road and highway industry.
While new roads, lighting and other maintenance features sound promising, the sum involved is not small, and Abertis will have to recover its investment somehow.
“Half of the money will be covered by Abertis’ own capital, while the other half will be financed with the help of 11 banks which will be local financing,” Metropistas CEO Julián Fernández Rodes said.
And what does that mean for drivers? The government has already formulated a fiscal plan that will inevitably continue to impact toll rates. Will the new PPP have a further effect on the already established hikes that will occur?
“Toll prices will inevitably continue to rise because of inflation,” Pierluisi said. “In the past there have been raises to the toll prices, and they will happen in the future depending on the inflationary cost of living. In terms of Abertis, it’s the same thing; the income created by these tolls will be directed straight to Abertis. The government will not have any participation in that.”