Germany is planning to set up a public-private agency to manage its famous autobahn highway system, which could potentially levy and collect the nation’s first road tolls on auto drivers, Handelsblatt has learned.
The new agency — which would replace the system of directly funding highway construction from the federal budget — aims to open up construction and maintenance to private investors, according to report that will be presented in Berlin on Tuesday.
The new plan is laid out in a report by an expert commission set up by the German vice chancellor and economics minister, Sigmar Gabriel. The commission proposes a corporation to be dedicated to financing infrastructure projects throughout Germany.
The plan would shift part of the costs and debt necessary for the 12,917-kilometer (8,026-mile) autobahn system from federal coffers to a quasi-public agency, giving investors, especially the nation’s insurers, a new source of low-risk, high-return investment.
The new public-private highway company will use revenue from tolls planned on motorists and proceeds from private investors.
Private investors, such as insurance companies, would be given the chance to buy into road and bridge projects through bonds, shares or credit lending.
“Private investors will want to know exactly how much risk is involved in each project. ”
“This is generally speaking a great idea,” said Olaf Lüdemann, the head of the energy and infrastructure team at Berenberg Bank in Hamburg. “The problem is that investors don’t know yet in detail under what criteria they will be investing.”
Mr. Lüdemann said that if the government offers a guaranteed return, investors will have relative certainty and be likely to commit funds. But if investor’s money is tied to actual project risk, the government will need to lay out how great those risks will be.
“Private investors that are likely to be interested, such as large pension funds or insurance companies, are professionals and will want to know exactly how much risk is involved in each project,” Mr. Lüdemann said. “The government either needs to be very transparent or offer higher returns on the money invested.”
Some projects in Germany already allow private investment, such as the A7 autobahn highway north of Hamburg. Each projects has been individually assessed and investors were closely filled in on all details.
But these forms of co-investment have been relatively rare in Germany.
Germany’s states and federal government have been until now responsible for highway and road construction and maintenance.
But a new savings program in Germany or debt brake – the largest in Germany’s post-war history – which the German Parliament passed into law in 2009, requires the government to limit debts to a maximum of 0.35 percent of gross domestic product by 2016.
States and federal spending on infrastructure has been curtailed in recent years to accommodate the restriction, the report said.
If a new source of funding wasn’t found, future generations “would inherit a much worse infrastructure system,” according to the the report by the Fratzscher Commission, the expert panel named after the commission’s president, Marcel Fratzscher, a German economist and president of the Berlin economic research institute, DIW.
The new corporation would allow the government to collect money from private investors. At the same time, the new entity would remain under the control of the government, avoiding a classic privatization of German roads.
The plan is supported by Wolfgang Schäuble, the German finance minister, Alexander Dobrindt, the transport minister, and Mr. Gabriel, who each represents one of the parties in Ms. Merkel’s ruling coalition of Christian Democrats, Christian Socialists and Social Democrats. The broad support suggests the plan has a good chance of being approved by Ms. Merkel and her cabinet advisers.
“This corporation could pay for highways and the most important main roads,” said Volker Kauder, the parliamentary leader of the Christian Democrats, Ms. Merkel’s party. “This is a big step for our coalition governemnt.”
The plan was modelled after Austria’s highway corporation, ASFiNAG, which is owned by Austrian the government and plans, builds and maintains roads with money from tolls.
To set up such a corporation in Germany will require some changes in constitutional law.
Germany spends €3 billion a year on highway repairs, a road network which was first planned and built during the 1930s under Adolf Hitler. Of that, €2 billion comes from taxpayer funds and €1 billion from a toll on trucks that was enacted in 1995.
Germany wants to extend tolls to non-German car drivers from January 2016 onwards. Germans are supposed to be shielded from the new fees through corresponding reductions in annual sales taxes on cars, but that provision is likely to be challenged in court
Backers of the new financing plan say the tolls on autos could raise €3.7 billion annually in Germany.
Twenty other European countries already levy tolls on motorists, including France, Greece, Italy, Britain and Spain. Germany has been a popular transit country thanks to its free-of-charge roads.
Daniel Delhaes reports on politics, transport and airlines from Handelsblatt’s Berlin office. Franziska Scheven is an editor with Handelsblatt Global Edition and also based in Berlin, covering companies and markets for the most part. To contact the author: email@example.com and firstname.lastname@example.org