I. Enactment of a Resolution on the Interpretation of the RPA.
On 24 May last, the Spanish Official Gazette (BOE, pursuant to the Spanish official name) published a Resolution by the Cabinet, issued on 26 April 2019, on the interpretation of several toll road concession contracts as regards the calculation of the “Administration Patrimonial Liability” (RPA, pursuant to Spanish official name). The purpose of this resolution is to clarify the calculation of the RPA that applies to toll road concessions, which contract has been terminated as a result of the concessionaire’s insolvency proceedings, for which a termination file has been initiated.
II. Calculation of the RPA.
The State’s estimate, as per these calculation criteria, is that the RPA to be paid following the insolvency of nine toll roads amounts to 3,305 million euros. This estimate represents a significant increase from a previous 1,800 million euros.
Applying this calculation method, the State shall pay the equity value, without depreciation, (i) of the works effectively executed (including additional and complementary works) and real estate and (ii) of repossessions:
(i) Equity value of works effectively executed.
- Value of investments as per PEC (i.e. Execution Budget for each Contract), excluding VAT. That is to say, the value of the works that have been effectively undertaken (including duly approved additional and complementary works).
- In general terms, real estate has been deemed incorporated to concessions’ works. Otherwise, the value, calculated as acquisition cost net of depreciation, would be added.
(ii) Equity value of repossessions.
- Value of the just compensations in repossessions’ proceedings, that have been effectively paid, not capitalised, plus interest (provided that they are not attributable to concessionaire’s fault).
- Any amounts paid by concessionaires as part of the just compensations as a result of an omission of mandatory public information phase, which amount to 25% of just compensations.
- Amounts paid by the State directly, as a result of non-payment by the concessionaire, shall not be included in the RPA calculation.
On a general basis, a linear depreciation criterion shall be used, except as regards two roll roads, in accordance with their specific bidding conditions.
The amounts payable to each concessionaire may not exceed the maximum ceiling regulated in the Royal Decree awarding the concession and each concessionaire’s Offer. As an example, the R-3 and R-5 have a maximum of 637 million euros, while the R-2 has a maximum of 40.7 million euros.
Notwithstanding this limit, the RPA may be increased in the amounts of investments made in additional and complementary works approved.
Detractions due to maintenance and fine-tuning of infrastructures.
From the total figure, they shall deduct the amounts necessary for the maintenance and restoration of the toll roads, that is, for them to regain the minimum standards of quality required for operation, which are estimated at an approximate total of €317 million, as this deficiency is attributed to a lack of adequate maintenance by the concessionaires.
Certain situations that affect the calculation of the RPA are still outstanding for reasons beyond the control of the Administration (e.g. just compensations are not definitive or there is lack of evidence that the expropriated has agreed to have been payed). This justifies a provisional withholding of part of the amount of the global RPA, in the amount pending determination.
Increase of the RPA by interests on late payment.
- The resulting amount will be increased with interests accrued during the period after the sixth month following the final Resolution that opens the liquidation phase in the insolvency proceedings until the date of payment. This amount could increase the RPA by about 360 million euros.
- Once the RPA has been determined in the liquidation file of the concession contract, the State has a period of three months to pay the corresponding amount to the concessionaires. After the lapse of this period, interests will accrue according to the corresponding legal interest.
III. Additional considerations.
- There are outstanding legal proceedings pending court resolution determining whether or not the forfeit of the construction and operation guarantees is applicable as a result of the termination of the concession contract due the concessionaire’s insolvency situation.
- Additionally, in relation to some concessionaires, guarantees were issued by shareholders and partners in favour of banks, which completed the amount of the RPA that is finally recognized by the State.