In 1994 the French State set up a system of multi-year management contracts (Contrats de Plan), under which companies holding motorway concessions can implement additional capital expenditure in return for improved toll escalation rates for the term of the contract. Typically these contracts run for a five-year period.
In January 2014, APRR entered into new management contracts covering the 2014-2018 period in relation to the APRR Concession and the AREA Concession. The two contracts provide for ongoing capital expenditure with annual tariff increases applicable from 2014-2018, of 85% of French CPI (an increase from 70% x French CPI as provided under the concession contract) plus supplemental toll increases of 0.37% for the APRR Concession and 0.41% for the AREA Concession.
Stimulus Package & Concession Contract Amendments
In August 2015, a stimulus package and concession contract amendments for French motorway companies, including the APRR and AREA Concessions, were agreed and formalised with the French State.
The amendments for the APRR and AREA Concessions include the following significant measures:
- ~€720m of capex (Stimulus Package) in exchange for 2 years and 1 month of concession extension (APRR Concession) to 31 January 2035 and 3 years and 9 months of concession extension (AREA Concession) to 30 September 2036
- Compensation for the 2013 land tax increase via supplemental toll increases of +0.81% in 2016, +0.22% (APRR Concession) / +0.21% (AREA Concession) in 2017 and +0.76% in 2018
- Compensation for the 2015 toll freeze via supplemental toll increases of +0.25% for the APRR Concession and +0.26% for the AREA Concession over 2019-2023
- Other targeted measures to enhance stability of the concession contracts include:
- Improvement of protection against future adverse changes to motorway-specific taxes
- Revenue caps may apply in the event of future material outperformance
- APRR Group to contribute an annual infrastructure payment of ~€15.8m (indexed) to French Transport Financing Agency (AFITF) and to invest ~€50m into a green transportation fund – initiatives implemented across the French motorway companies
Maurice Lemaire Tunnel
In January 2016, the Tunnel Maurice Lemaire (TML) concession was merged into the APRR Concession. As a consequence, the APRR Concession maturity was extended by 10 months to 30 November 2035.
TML is an 11 kilometre road and tunnel between Sainte-Marie-aux-Mines (Haut-Rhin, Alsace) and Saint-Dié (Vosges, Lorraine) in eastern France. Prior to this amendment the TML Concession had a concession expiry of 2068.
New Motorway Investment Plan
In November 2018, APRR and AREA formalised with the French State a capital investment plan by way of amendments to their respective concession contracts. The capital investment plan has a total value of €187m, to be partly financed by local authorities. The plan consists of 12 projects including new or improved motorway exchanges, environmental protection development as well as customer service improvements.
The additional investments will be compensated via supplemental toll increases of 0.198% per annum at APRR and 0.389% per annum at AREA over 2019-2021.