Study favors private management of island toll roads
By The Star Staff
The Puerto Rico Public-Private Partnerships Authority (P3A) recently published the results of a desirability and convenience study that found it was convenient to put the management of four Highways and Transportation Authority (PRHTA) toll roads under private hands.
The PRHTA now has given the public and stakeholders until April 25 to comment on the study. All comments must be addressed to email@example.com, according to a notice published in social media.
The study, whose cost was not provided, evaluated several options in trying to determine whether it is desirable for the government to procure a long-term concession contract with a private operator for toll roads PR-20, PR-52, PR-53 and PR-66.
The PRHTA’s study evaluated six options to determine the best alternative in dealing with PRHTA roads. It comes after a fiscal plan that says the bankrupt PRHTA’s toll roads should be put under private concessions.
Option 1 or status quo option called for the PRHTA to continue to operate and maintain the toll roads; Option 2 called for the concession of all toll roads under a P3 agreement in exchange for toll revenue; Option 3 called for putting only PR-52 under private management as the highway has historically generated the highest level of revenue compared to the other toll roads, the report said.
Option 4 called for the concession of all toll roads under a revenue sharing design. The option is just like Option 2, although instead of the commonwealth receiving an upfront payment from the private operator, the government would partake in ongoing revenue generated by the toll roads through a revenue sharing mechanism, the report says.
Option 5 consists of the concession of all toll roads under a private operator to enhance, operate and maintain all toll roads under a concession model with revenue sharing. However, in this alternative, the PRHTA would forgo any upfront concession payment to require the private operator to operate and maintain scope outside of, and in addition to, the toll roads, the report said.
Under Option 6, the PRHTA would procure a private operator to operate and maintain the toll roads under certain performance requirements. In this option, PRHTA would make periodic payments for the asset being open and available to a predefined standard. In such an arrangement, payments to the private operator would be subject to deductions for lack of performance against the performance standards. The private operator would be responsible for improving, operating, and maintaining the toll roads but would not have responsibility or risk for the level of usage of the toll roads or revenues generated, the report said.
The study found that most of the potential options under consideration would not generate an upfront payment to address the initial capital investment, reserve account funding, and outstanding debt repayment requirements.
It then concluded that “the results suggest that a concession of all toll roads option appears to be desirable and convenient for P3A when compared to the concession of PR-52 and the remaining options within the study,” the report said.
The two concession options, a concession of all toll roads (Option 2) and the concession of PR-52 (Option 3), “fully address the primary objectives from a qualitative perspective,” the study found. From a quantitative perspective, both options result in an upfront concession payment that PRHTA can use to pay for initial capital investments and debt secured by toll revenue but only in certain circumstances depending on the level of return that a concessionaire requires.
“For instance, the concession of all toll roads option results in a net shortfall at a 13% IRR (internal rate of return) but is marginally feasible when the return requirements are reduced to 11%,” the document says. “The Concession of PR-52 is marginally feasible across the IRR range presented, though includes a prorated outstanding debt assumption that has not been negotiated as part of PRHTA’s restructuring.”
The study can be found at https://lnkd.in/dgh-WCSs.