# **Introduction**

In 1992 the Italian Parliament passed a reform that allows the Inter-ministerial Committee for Economic Programming ( _CIPE-Comitato Interministeriale di Programmazione Economica_ ) to revise fully the highway concession system and broadly the transport related programs. The reasons can be clarified by the name of this law: “Urgent intervention on public finance.”<sup>2</sup> In fact, both the 1992 Italian financial crisis and the signing of the Maastricht Treaty had put the government under severe stress to cut public debt and privatize its companies.

However, by itself this law did not grant the possibility for private companies to run highways as concessionaires. Between 1992 and 1997, the agent in charge of highway creation and management was still the government: either through the National Street Enterprise, ANAS ( _Azienda Nazionale Autonoma delle Strade_ ), which is 100 percent owned by the Ministry of Economy and Finance ( _MEF_ ), or through Autostrade, which was owned by the Italian Reconstruction Institute ( _IRI_ ), a gigantic public holding, which was itself controlled by the MEF.

In addition to the need to cut public debt, in the mid-1990s the government had to react against a 20-year ban<sup>3</sup> on highway construction, which had moved Italy away from its innovative transport policy stance of the 1970s and caused a dramatic infrastructure constraint. Figure 1 reports the evolution of the highway network of four large European countries (Germany, Italy, France and Spain).<sup>4</sup> We can see that although in 1970 Italy had the second largest network in kilometers, its infrastructure capacity stagnated from 1978 onward, while the other European countries achieved impressive gains. Therefore, the necessity to cut public expenditure and the need for new investments were the two fundamental reasons behind the opening up of concessions to private companies in the highway sector. As Carlo Azeglio Ciampi, Treasury Minister between 1996 and 1998 and President of the Republic from 1999, reported in a meeting at the Italian Parliament in 1997: “ _the fundamental objectives of our privatization program are two (...) first of all, (...) to enlarge, reinforce and modernize the Italian market (...) secondly, the privatization program is aimed at reducing public expenditure and the stock of national debt._ ”<sup>5</sup> For this reason, in 1999 the largest highway concessionaire, Autostrade, managing more than 40 percent of the total national network, was sold for 7 billion euros (2.5 from a private group, Atlantia, and 4.5 from the share market) with a 40 year concession<sup>6</sup> and opened the way to further initiatives. In fact, between 1999 and 2006 more than 64 percent of the existing Italian highway network was auctioned to private companies, with two main private groups dominating the market, as Figure 2 shows.

> 2 Law 498/92 available in Italian only at <u>http://pa.leggiditalia.it/</u>

> 3 Article 18bis of Law 492/75 which states that: “ _it is also suspended the construction of new highways or part of them or tunnel for which a tender has not been issued yet_ ”(...è altresì sospesa la costruzione di nuove autostrade o tratte autostradali e di trafori di cui non sia stato effettuato l'appalto).

> 4 Transport section on the online European statistical database, Eurostat,

> <u>http://epp.eurostat.ec.europa.eu/portal/page/portal/statistics/search_database</u>

5 Source: Audizione sulle privatizzazioni alle Commissioni riunite Bilancio Finanze Attivi” available on the Treasury Ministy website http://www.tesoro.it/documenti/documento.asp?idd=3718# . The reported quotation is the following: “l’attività di dismissione del patrimonio pubblico rappresenta uno dei passaggi fondamentali nello sforzo del Governo per l’ampliamento, il rafforzamento, e la modernizzazione dei mercati (...) in secondo luogo il programma di dismissioni è legato all’obiettivo del contenimento del fabbisogno pubblico e dello stock di debito”. 6 See <u>http://ricerca.repubblica.it/repubblica/archivio/repubblica/1999/10/21/privatizzazione-autostrade-volata-solitariadi-benetton.html</u> 2