Private invesment

Autobahn's Missed Opportunity

  • Why it matters

    Why it matters

    Germany urgently needs to boost investment in its crumbling infrastructure but has decided not to incorporate private investors in a reform of its highways management system.

  • Facts

    Facts

    • A new law reforming Germany’s highways management system is due to pass both houses of parliament by June.
    • A plan to use the reform to attract more private investment has been abandoned.
    • The reform will transfer responsibility for the management of highways to the federal government from the regional states.
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    Audio

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Verkehr in Berlin
No slice of Germany's autobahn for private investors. Picture source: DPA

Germany’s ruling coalition has ditched a plan to mobilize private investors to help fund the modernization of the country’s ageing highway network, Handelsblatt has learned.

A new law due to be passed in June will centralize the management of the highway system as part of a reform of public funding, with the federal government due to pay €9.5 billion, or $10.4 billion, more per year and the regional states giving up the administration of highways in return.

Originally, Finance Minister Wolfgang Schäuble and Sigmar Gabriel, who was the economics minister at the time, had wanted to use the reformed highway company to attract private money in the form of pension funds and insurance companies, which are seeking safe returns in the current era of low interest rates.

But that’s not going to happen now. The new company created under the law will be forbidden from raising its own funds, for example, by charging tolls. It will remain government property in the future, managing up to nine regional units each in charge of maintaining around 1,000 kilometers of highway.

The investment will come exclusively from federal government funds, which in turn will consist of tax money, the existing truck toll and the planned car toll system.

The company will also have access to credit amounting to up to €2 billion per year. Private borrowing will be forbidden but the company will be able to award contracts to private sector companies, as is already the case now. Public private partnership will only be permissible for highway construction projects of up to 100 kilometers.

Some lawmakers criticized the reform. Arnold Vaatz of Chancellor Angela Merkel’s Christian Democratic Union warned that “the inefficient and bad system of contract management by the regional states will turn into an even worse one under federal management.”

 

Daniel Delhaes reports on politics, transport and airlines from Handelsblatt’s Berlin office. delhaes@handelsblatt.com

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