News Briefs - Brazil, China, India, Indonesia, Philippines, Portugal

Brazil - Canada's Brookfield and Spain's Abertis invest in Obrascon

The Globe and Mail reports that Brookfield Infrastructure Partners LP and Spain's Abertis have formed a joint venture (49/51) to buy a 60% shareholding in Obrascon Huarte Lain Brasil SA.  The price for the consortium is around US$1.72 billion, and the consortium is willing to purchase the remaining 40% if required.  Canadian Business reports:

OHL Brasil is one of the largest owners and operators of toll road concessions in Brazil with more than 3,200 kilometres of roads in states that account for approximately 65 per cent of Brazil's gross domestic product and are home to nearly two-thirds of the country's 70 million vehicles.

The deal means that Obrascon's Spanish shareholders, Obrascon Holdings Ltd, acquire 10% of the stock of Abertis (it already has 5%) raising its shareholding to 15%.  Obrascon effectively maintaining an indirect interest in the Brazilian toll road business.  OHL Brasil has nine toll road concessions.

 

China - public holidays to be toll free

The Wall Street Journal reports that the Chinese Government has announced that cars should be able to drive toll-free on public holidays.  This includes all privately owned toll roads.   The measure is designed as a popularity move as car ownership soars, but most car trips are relatively localised as car owners baulk at paying tolls to travel long distances.  The report says:

Moody’s says the decision will knock up to 5% off toll income this year at Shenzhen International Holdings, a Hong Kong-listed operator of 17 Chinese toll roads.

What will be curious is whether it results in congestion on those days, and whether it will impact on the viability of some future projects.  Another report implied that this was a politically driven move, designed to win favour with the growing middle-upper classes, indicating that regardless China's one-party system, the government is sensitive to public opinion given the ease by which people can express concern or dissent via the internet.
 

India - Taj Mahal toll road opens

I don't typically report on the opening of toll roads, because there would be far too many to report.  However, this report from travel website Wanderlust caught my eye as it is about a new toll road from Delhi to Agra, effectively connecting the capital to the Taj Mahal.  The private expressway is 165km long, six-lanes wide, cost US$2.17 billion to build and the toll is around US$9 as it halves travel time on the route.

 Indonesia - Jasa Marga buys part of PT Translingkar Kita Jaya

The Jakarta Post reports that Indonesia's large state owned toll road company, Jasa Marga, has bought a 21.24% shareholding in private toll road consortium PT Translingkar Kita Jaya for the equivalent of US$14.6 million (Rp137.9 billion).  The company operates the 14.64km Cinere–Jagorawi toll road which is divided into three sections. The first section is 3.7 km from Jagorawi to Raya Bogor, the second is 5.5 km from Raya Bogor to Kukusan, and the third is 5.4 km from Kukusan to Cinere.  The first section is operational, the second to open later this month and the third in May 2013.  33,215 a day are expected on the road by the end of 2012, growing to 47,816 in 2014.

"The acquisition of Translingkar is a part of the company’s plan to maintain sustainable business expansion,” Jasa Marga said in a written statement.

The report notes that Jasa Marga operates 545km of toll roads in Indonesia, estimated to rise to 738km by 2014.

It continues by saying:

The company explained that Indonesia’s toll road development is lagging behind neighboring countries such as Malaysia, which currently has around 4,000 kilometers of toll roads. Meanwhile, Indonesia — the largest economy in Southeast Asia — only has around 750 kilometers of toll roads.

No doubt this is in part due to the fact Indonesia is an archipelago, although the bulk of economic activity is on Java, the main island which has the majority (60%) of the national population (and congestion).

Philippines - Metro Pacific Tollways to be delisted, minority shareholders bought out

Business Mirror (Philippines) reports that  Metro Pacific Investments Corporation (MPIC) is to delist its subsidiary Metro Pacific Tollways. It intends to do so by the end of the year because only 0.15% of Metro Pacific Tollways is floated, a proportion considered inadequate by the Philippine Stock Exchange.  The Stock Exchange has warned companies with less than 10% floatation that it would suspend trading in their stocks from 2013 before compulsorily delisting them.  MPIC intends to buy out the minority shareholders, which at current market prices would only come to around US$1.2 million.  MPIC Chief Financial Officer David Nicol said the strategy would then be to consider strategic partners to invest in Metro Pacific Tollways. 

Metro Pacific may generate considerable interest given the roads it owns and the concessions it has rights to, given the prospects for potential growth in Philippines as its roads are significantly superior to the untolled alternatives.

Portugal - Abertis sells its shareholding of Brisa to Tagus

Following a report in July that Abertis no longer considers its investment in Portuguese toll road operator Brisa, as strategic, Bloomberg now reports that Tagus has acquired that stake (15% of the operator).  Tagus’s partners are family-owned holding company Jose de Mello SGPS SA and London-based Arcus Infrastructure Partners LLP, and already own a combined 49.6% of equity in Brisa, but 53.8% of the voting rights. Bloomberg seems to indicate that Tagus is seeking to raise its stakeholding to 90% so it can delist Brisa.

The report says that :

The disposal of Abertis’s entire stake in Brisa will generate 312 million euros ($386 million) in cash flow.

Tagus, a venture formed by Brisa’s two biggest shareholders, offered 2.76 euros a share in July .

This followed an offer in March 2012 of 2.66 Euros per share, and Abertis noting a distinct lack of interest in buying the shareholding, no doubt reflecting concerns over Brisa's exposure to Portuguese toll roads in the current recessionary climate in that country.   Abertis appears to have decided to take what it can as it effectively exits the Portuguese toll road market.   The Tagus bid compares to a share price of currently 2.09 Euros following the deal.

Tagus noted that it wasn't obliged to buy more shares after the deal with Abertis, so that many shareholders now indicate that they think there are unlikely to be any significant buyers for the Abertis shares now that Tagus has 85% of the shares in Brisa.

Manila can support two competing toll roads?

Business Mirror Philippines has an interesting report that, with maps, shows the scale of potential in a developing market for new tolled routes with anticipated growing demand: 

METRO Pacific Tollways Corp. (MPTC), operator of North Luzon Expressway (NLEx), believes that Metro Manila is big enough to support two planned connector toll road projects linking the northern and southern toll gateways to help ease traffic conditions.

MPTC President Ramoncito Fernandez countered concerns that the P35-billion toll road project had become less feasible following the government’s unexpected decision to approve both its proposal and that of rival San Miguel Corp. (SMC) and partner Citra Metro Manila Tollways Corp. of Indonesia, which use a different alignment.

While Fernandez conceded that the original assumption was for only a single connector road to operate—in this case a 13.2-kilometer elevated road over the Philippine National Railway tracks —he said MPTC and SMC will be serving different markets.

“Since [our project] is connected to the harbor it serves more the logistics part of the business plus the people who travel from north and south and vice versa. [SMC’s] market, from what I understand, will be local travelers,” Fernandez told reporters at the sidelines of the Institute of Corporate Director’s 9th annual dinner in Makati City on Wednesday.

“We believe the country can afford two [Metro Manila] connector roads,” Fernandez said.

He said customers might overlap “but not enough to say that one will fail because of the other.”

MPTC’s connector road will effectively link South Luzon Expressway (SLEx), recently acquired by the San Miguel-Citra partnership, with NLEx as well as MPTC’s harbor link project.

The SMC-Citra connector road is a 14.2-km elevated tollway that will also connect SLEx with NLEx. The project, an extension of Citra’s Skyway project, which currently ends in Makati City, will reportedly run parallel to Metro Manila’ main highway, Epifanio de los Santos Avenue.

While tracing independent alignments for the most part, the two projects will share a common 3-km route, which would be jointly built by MPIC and San Miguel-Citra, Transportation Secretary Manuel Roxas said last week. 

MPTC's proposal in blue, SMC Citra's in red. Black is NLEx and SLEx

 Fernandez said he expects MPTC to be awarded the project by year-end following a competitive or “Swiss” challenge. Completion is expected by 2015, the company earlier said.

The proposal by San Miguel-Citra, meanwhile, will not be subject to any competitive challenge. Roxas explained earlier that MPTC’s project is considered an unsolicited bid while that of San Miguel and Citra already has an existing franchise to build as part of the Skyway extension.

As you can see above with my depiction, the overlap is in the south, which will be interesting (will there be parallel or stacked highways?).  The blue proposal essentially would be built on top of an existing rail corridor, the red proposal mostly above an existing wide boulevard.  These, combined with the Epifanio de los Santos Avenue ring road, will mean there are effectively three bypass routes across Manila.  Traffic volumes are probably likely to support the two new ones given scope for more after this construction binge will probably be zero without tunnelling. I don't doubt that given the state of traffic in Manila, that these roads will get well used, but the point at which Manila is "built out" in terms of it being too expensive to acquire land or corridors for more roads would appear to be getting closer.  These roads are being built on top of existing railways and roads.  Tolls will mean demand can be managed to hopefully ensure the roads remain free flowing.  However, the obvious question will come, perhaps in 10-15 years time, as to whether Manila will need some form of congestion charging , as a more efficient alternative to building a fourth new highway corridor around or across the city.  Meanwhile, tolls and private investment are enabling the city to build out highway infrastructure to try to cope with its growth.

Series of toll road investor results: Ferrovial, Atlantia, Transurban, Metro-Pacific

Ferrovial

Construction News reports Spanish infrastructure investor Ferrovial reporting a 312 million euro in net profit in the first half of 2011, contrasting with losses of 164 million euro in the same period of 2010. Notable was how the EBITDA on the Toronto 407 ETR rose by 8% in part due to higher tolls and lower operating costs. The Airports division contributed 62% of EBITDA, Services 14%, Toll Roads 14% and Construction 10%.

Ferrovial owns its toll roads through its subsidiary CINTRA.  Its highway assets (whole and partial) are:

- 407 ETR Toronto, Canada;

- Santiago-Talca Highway, Chile;

- Talca-Chillan Highway, Chile;

- Forest Route Highway, Chile;

- Collipulli-Temuco Highway, Chile;

- Temuco-Rio Bueno Highway, Chile;

- M-203 Madrid (Alcala-O'Donnell), Spain;

- AP36 Madrid-Levante, Spain;

- AP7 Costa del Sol Highway (Malaga-Guadiaro), Spain;

- Autema C16-E9 Highway (San Cugat del Vallés to Manresa), Spain;

- R4 Madrid-Ocana, Spain;

- Chicago Skyway, Illinois, USA;

- Indiana Toll Road, USA;

- LBJ Express Toll Lanes, Dallas, Texas, USA;

- North Tarrant Express toll lanes and road, Dallas-Forth Worth, Texas, USA;

- SH130 Austin-San Antonio, Texas, USA;

- E65 Central Greece Motorway;

- Ionian Roads (Antirio to Ioannina, Athens to Skarfia), Greece;

- M3 (Dublin-north of Kells), Ireland;

- M4 (Kilcock-Kinnegad), Ireland;

- A22 (Portimao - Vila Real de Santo Antonio), Portugal;

- Euroscut Azores Highway, Sao Miguel Island, Portugal; and

- A27-A28 North Coast Highway, Portugal.

Atlantia

Reuters reports that the Italian toll road investor company had a 41% increase in profit for the first six months of 2011 compared to 2010. This reflected sale of a stake in one road and increased toll revenue, despite declining traffic volumes (with a 0.5% decline in volumes on Italian toll roads).

"Excluding the sale of an investment and charges related to impairments, profit rose 12 percent over the period."

Atlantia's highway assets are:

- Autostrade per l'Italia SpA (2854.6 km of network of Italian motorways);

- Società Italiana per Azioni per il Traforo del Monte Bianco (5.8 km), which manages the Italian section of the Mont Blanc Tunnel;

- Raccordo Autostradale Valle d'Aosta SpA (32.3 km), which manages the road linking Aosta and the Mont Blanc Tunnel (Italy);

- Autostrada Torino-Savona SpA (130.9 km), which manages the motorway linking Turin and the Ligurian coast (Italy);

- Società Autostrada Tirrenica SpA, which holds the concession for the entire length of the Livorno-Civitavecchia motorway (240 km) and currently manages the Livorno-Rosignano section (36.6 km) (Italy);

- Tangenziale di Napoli SpA (20.2 km), which manages Naples' orbital motorway (Italy);

- Società Autostrade Meridionali SpA (51.6 km), which manages the Naples-Pompei-Salerno motorway (Italy);

- A4 Krakow-Katowice motorway (Poland);

- Pune Solapur Expressways (50%) in India, which holds the concession (expiring 2030) for 110 km motorway in the state of Maharashtra;

- 135 km toll motorway serving the cities of Rio Bueno and Puerto Monttt in Chile;

- 442 km toll motorway in the state of San Paulo in Brazil;

- 23.5 km southern section of the orbital toll motorway serving the city of Santiago del Chile;

- 79 km toll motorway serving the cities of Algarrobo, Casablanca and Cartagena in Chile;

- 43 km of road network in the city of Santiago in Chile;

- 21.5 km north-eastern bypass in the city of Santiago del Chile; and

- Urban motorway linking the city of Santiago with Arturo Merino Benitez International Airport.

Transurban

The Herald Sun reports that Australian toll road company Transurban has reported a 90% increase in full year profit.  An 8.8 per cent rise in traffic on Melbourne CityLink, which netted A$434.6 million (US$424 million) in revenue, was a key contributor to total toll revenue of A$891 million (US$870 million) - up 10 per cent.  It carries a reported A$5.8 billion of debt behind its assets. 

The Australian reports an interview with Transurban chief Chris Lynch who said "Our roads are very robust ... There's not a lot of discretionary travel on our roads, it's largely people getting to work or the airport."

It was also noted that the Melbourne CityLink, it gained from an additional lane on the western approach to the toll road network allowing for greater use of its capacity.

The Australian also noted that:

"The acid test of an infrastructure company is the ability to pay generous distributions funded by real cash rather than debt. The "wedge of free cash" -- $390 million in all -- enabled Transurban to declare a 27c per security full-year payout, with management promising "at least" a 29c distribution this year."

Adelaide Now reports that Melbourne Citylink grew faster than the average 10% "with an increase of 12.8 per cent to contribute $434.6 million. Transurban said the completion of the upgrade on its southern link, adding lanes on CityLink between both tunnels and Toorak Rd, had been important in boosting traffic."

Transurban said traffic growth on the Lane Cove Tunnel, purchased nearly a year ago, had initially risen 6 per cent but had declined to 2.8 per cent this calender year due works on the M2.

Transurban's highway assets are:

- Melbourne Citylink (Australia);

- Hills M2 motorway, Sydney. Australia;

- Lane Cove Tunnel, Sydney, Australia;

- Eastern Distributor, Sydney, Australia;

- Westlink M7, Sydney, Australia;

- M5, Sydney, Australia;

- Pocahontas 895, Virginia, USA; and

- Capital Beltway HOT lanes, Virginia, USA

Metro Pacific Tollways Corporation (Philippines)

The Filipino toll operator was reported by the Business Inquirer as saying:

earnings slipped 4 percent in the first half of the year to P725 million (US$17 million) due to lower-than-expected traffic growth and higher tax payments during the period. “Though traffic demand could be lower given sharp increases in fuel prices and the expiration of MNTC’s (Manila North Tollways Corp.) income tax holiday, MPTC still expects a strong financial performance this year with the increase in toll rates and modest traffic volume growth,” MPTC president Ramoncito Fernandez said in a statement.

The company's latest road is the Subic-Clark-Tarlac Expressway. Its portfolio also includes the North Luzon Expressway.