Opening of the M4 Kilcock / Kinnegad Scheme 12

Date: 13 December 2005

Colleagues, Ladies and Gentlemen,

I am delighted to be here today at the opening of the M4 Kilcock/Kinnegad Motorway and the remaining section of the McNeads Bridge to Kinnegad scheme on the N4. This is a hugely significant project for people journeying to the West and further testimony to this Government's ongoing commitment to upgrading our Ireland's transport networks.

This is the second of the new wave of Public Private Partnerships to be completed and follows the opening of the Dundalk Western By-Pass earlier this year. It also is the longest single road contract undertaken in Ireland and like the Dundalk Bypass has been completed and opened to traffic several months ahead of schedule.

The significance of this project in the development of the Galway and Sligo to Dublin road corridors must not be underestimated. Following the completion of this project and the McNeads Bridge project on the N4 it is now possible to travel on continuous motorway and high quality dual carriageway from Dublin to West of Kinnegad on the N6 (a distance of 55kms) and from Dublin to west of Mullingar on the N4 (a distance of 74kms).

Benefits

This new road will dramatically reduce journey times for people travelling between Dublin and the West of Ireland by improving traffic flow particularly at peak times. The Kinnegad and Enfield Relief Roads, constructed in recent years, had already brought some benefit to road users but became inadequate for the volumes of traffic using the routes. This new 39km section of high quality route will bring a huge improvement in travel conditions. In addition to bringing the West closer as envisaged in Transport 21, the new route will add further to the attractions of the Midlands and the Counties of Kildare, Meath and Westmeath as places to work and live.

By improving competitiveness through reduced journey times and greater journey time certainty roads such as this facilitate growth, job creation and more balanced regional development. Improved travel conditions and the removal of heavy traffic from towns and villages also has a major beneficial impact on the quality of life of large numbers of people.

PPP Programme

The opening of this scheme almost a year ahead of schedule further demonstrates the role of PPPs in the delivery of much needed road infrastructure. It also provides an opportunity to review where we have got to on the roads PPP programme. Overall the position is that 3 projects have been completed, (M50 Second West-Link Bridge, Dundalk Western By-pass and the KK scheme), 1 is in construction and ahead of schedule also (N8 Rathcormac/Fermoy By-Pass) and 6 are at various stages of planning and procurement. Of these 6, the Waterford City By-pass, the N7 Limerick Tunnel, the M3 Clonee/Kells motorway and phase 2 of the M50 upgrade, are being targeted by the NRA for a 2006 start. Overall the NRA estimates that private investment in PPP projects amount to approximately €500m to date and that it will amount to approx €2bn over the period to 2010. This is a significant complementary addition to Exchequer funding and will enable projects to be advanced quicker than otherwise might be the case. The projects are not being undertaken as toll PPPs however, because of the private sector funding. They are being undertaken on this basis because it maximises efficiency and value for money. Better value for money can be achieved for certain projects through private sector expertise and flexibility by giving enhanced scope for innovation and by allocating risk to the parties best able to manage it. Projects are only undertaken as toll PPP's if that approach provides value for money.

Road toll PPPs signed so far have demonstrated the potential for real risk transfer and value for money outcomes for the Exchequer. Indeed the contract for this scheme was awarded Project Finance International (PFI) Infrastructure Deal of the Year 2003 and Euromoney/Project Finance Magazine Transport Deal of the Year for Europe 2003.

The NRA, in line with Department of Finance requirements and guidelines relating to PPP's and capital appraisal, have a rigorous system in place in relation to the procurement of PPP projects. PPP's are subject to all the normal discipline applying to procurement generally and in addition PPP projects are subject to a number of additional controls which have been developed in recognition of the complexity of PPP projects.

Lessons Learned

This new programme of toll PPPs is very different to what has gone before. Lessons have been learned and applied from the West-Link experience and strong safeguards have been built in to prevent PPP companies earning super-profits and to ensure a high level of toll plaza performance. The fact alone that the Kilcock/Kinnegad toll concession was only awarded following a strongly competitive procurement process contributed substantially to a good outcome from a value for money perspective. Looking at the financial aspects of this project in more detail it is clear that a fair deal has been struck. The concessionaire, Eurolink, has undertaken to construct and operate for 30 years, 39 kms of motorway standard road and to share the toll revenue with the NRA once traffic levels exceed a certain threshold in return for:

a capital contribution of €146m;

payments towards operation and maintenance costs amounting in total to €6m; and

the right to charge a toll for 30 years.

When one considers that the NRA estimate the construction, operation, and lifecycle re-investment costs of the project at €550m if it had to construct the project by traditional procurement it is clear that the taxpayer, the road user and the concessionaire are getting a fair deal.

The concession agreement also contains demanding performance criteria in relation both to the operation of the toll plaza and the operation of the road itself. The performance criteria ensure that the tolling facilities will provide an efficient method of toll collection and that there will be little if any delay to users.

More specifically I understand that the PPP agreement provides that:

each automated toll collection express lane will allow unhindered passage of a vehicle with a valid transponder;

for each direction of approach to a toll station, the average queue of vehicles calculated across all lanes will be no greater than 6 vehicles; and

the queue of vehicles waiting in any toll lane shall not exceed 12 vehicles at any time.

A strict performance regime is provided for in the PPP contract to ensure compliance with these requirements. Defaults in performance by the PPP Company lead to the imposition of a financial penalty together with the award of points under a penalty points system which may trigger increased levels of monitoring at the PPP Company's cost and ultimately contract termination. These provisions while not requiring the barriers to be lifted, clearly incentivise the operator to maintain a high level of service.

I have dealt in some detail with the PPP element of the project because I consider it important that the evaluation of PPPs be well founded and that all aspects are taken into account.

Transport 21

Before concluding I would like to refer briefly to Transport 21 which the Government recently launched and to confirm that the good progress that has been made in the roads programme in recent years will be sustained under Transport 21. The launch of Transport 21 signalled a new era for transport in Ireland. The investment of €34.4bn, including nearly €16.5bn for national roads, will transform this country's transport network over the next ten years.

Projects such as this and the other projects underway and in advanced planning throughout the country provide a good start to Transport 21.

Transport 21, containing as it does an integrated approach to meeting Ireland's transport needs underpinned by sustained high levels of investment, will improve our competitiveness, promote more balanced regional development and improve the quality of life for all our citizens.

Building on the progress that has been made since 1997 this Government is committed, through Transport 21 to ensuring that Ireland has the transport infrastructure to support ongoing growth and development.

Conclusion

In conclusion, I would like to acknowledge the contribution of all involved in the delivery of this project - the NRA, local authorities, Eurolink, consultants, and very importantly, the local community and landowners who have co-operated in the development of this project. I wish Eurolink well in the operation and maintenance of this key piece of transport infrastructure.

Thank You.