Bloomberg reports that the US territory of Puerto Rico has shortlisted four bidders for the privatisation of two toll roads on the island.
All four consortia are led by either Spanish or Brazilian road/infrastructure investors:
- Spain’s Abertis Infraestructuras SA and Goldman Sachs’s Infrastructure Partners II unit;
- Brazil’s Cia. de Concessoes Rodoviarias;
- Spain’s Itinere Infraestructuras SA and Citigroup Inc.’s Infrastructure Investors unit; and
- Spain’s Obrascon Huarte Lain SA and Morgan Stanley Infrastructure Inc.
Puerto Rico's Republican Governor is driven by a US$3.3 billion budget deficit that it is seeking to close by retiring debt to reduce net interest payments. The privatisation will be a concession to own, operate and maintain the roads for 40-50 years.
The roads to be sold are the Jose de Diego highway (Highway 22) and Highway 5 which generate around US$90 million p.a. in revenue, but the key will be making sure the concessionaire actually manages the roads to a high standard rather than simply regards the tolls as a way to make money.
Once these concessions have been sold, more are to come. Privately owned roads? Yes. They exist all over the world, and finally more and more administrations are coming to appreciate the money that can be made from selling highways, but also the innovation that it can bring.