TWO DECADES OF DBFO ROADS IN THE UK AND SPAIN: AN EVALUATION OF THE FINANCIAL PERFORMANCE

Road schemes are of major importance in the global PPP market. We focus on Design-Build-Finance-Operate (DBFO) arrangements covered by shadow toll or availability payment mechanisms, where the UK and Spain are key players. Now that a good number of DBFO schemes in the UK and Spain have been operational for well over half the contract period, there is scope for a detailed ex post evaluation of DBFO performance in both countries and an analysis of how the DBFO model has evolved. Preliminary results show that these contracts continue to be very expensive for public administrations, especially in the UK, where the financing costs and fee per kilometre are high. On the other hand, they are an easy source of revenue for the parent companies of the concessionaires, where the increased use of subordinated debt rather than equity seeks to reduce risk. However, despite circumventing the controversial hard-tolling, some projects in both Spain and the UK present poor outcomes. Several other problems around these projects are identified, including lack of public accountability and transparency or poor governance, raising long-term questions around affordability and opportunities for further study.