WRITTEN QUESTION E-2015/96 by Carlos Robles Piquer (PPE) to the Commission (17 July 1996)

Subject: Funding of public works with private funds

The present economic climate, which requires major cuts in public expenditure on a wide scale, has had an adverse impact in a number of cases on the continuation of major public works, even leading to the halting or suspension of public works projects which in most cases are necessary, even essential.

The budget cuts, which can have such a deleterious impact on public works contracts, have also had a major impact on labour recruitment, which has fallen, thereby causing a rise in the unemployment that the Union and the Member States are seeking to combat.

Does the Commission think, in view of these consequences of the present economic climate, that it should propose procedures to promote the financing of public works with private funding, allowing for payment at a later stage by means of 'shadow tolls' or the new methods of 'soft tolls' and mixed tolls?

Answer given by Mr de Silguy on behalf of the Commission (1 October 1996)

Successive European Councils (Brussels, Corfu, Essen) have stressed the need for a greater use of private finance to carry out large infrastructure projects. While private finance in this context comprises different degrees of private involvement and risk sharing, there is often a link between private finance and the fact that a project generates revenues. Fair and efficient pricing in which users contribute to the recovery of the costs they produce is a Commission objective in itself, irrespective of the way in which a project is financed. However, a stream of revenues arising from the use of a project will facilitate the financing and, often in connection with public subsidies, will allow private financiers to obtain the return they seek from their investments.

The Commission promotes efficient pricing in transport through a number of actions. The most important is the presentation of a proposal for a directive replacing Directive 93/89/EEC ((OJ L 279, 12.11.1993. )) known as the vignette directive which regulates not only user charges in the form of vignettes but also motorway tolling. The Commission has also published a green paper on the recovery of external costs (noise, congestion and pollution) and those of infrastructure (capital, repair and maintenance) ((COM(95) 691 final. )). This green paper is intended to facilitate public debate. Moreover the Commission is also financing a number of studies on electronic toll collection, so as to improve the viability of tolling in densely populated areas. In the other modes of transport where charging the user has a wider acceptance the Commission puts more emphasis on transparency, competition and freedom of access.

A number of Member States are developing projects by using shadow tolls paid from public budgets, frequently in relation to the traffic flows borne by a project. One advantage of this scheme is that it brings private management efficiency to project implementation. However from an economic view the user is not paying directly for the costs it produces. From a financing viewpoint, no new funds are generated to complement those coming from tax sources. Soft tolls, insofar as they are larger than their collection costs, fulfil to a lesser but still valuable extent the objectives of guiding resource allocation and generating revenues. The fact that they do not completely cover the costs incurred implies the existence of public subsidies, perhaps taking the form of shadow tolls.