10/5/2008Pennsylvania Tolling Deals Fail
Deal to lease Pennsylvania Turnpike to foreign investors for seventy-five years fails.
Despite expensive lobbying efforts, interested parties failed to sell the public on the need to increase the tolling burden on Pennsylvania motorists. Last Wednesday, Abertis announced the Spanish-led Pennsylvania Turnpike Partners (PTP) consortium had dropped plans to lease the Pennsylvania Turnpike until the year 2083.
"PTP believes the situation is not propitious for a third extension," Abertis said in a statement Wednesday. "Progress in the approval process, which is taking longer than expected, alongside uncertainties in financial markets are behind the decision, which will give the partners of the consortium more freedom to assess other opportunities and projects, some of which are in part related to the current situation."
The deal would have allowed an immediate 25 percent hike in toll rates, followed by yearly increases of 2.5 percent or the inflation rate -- whichever is greater. With polls showing the public unconvinced of the benefits, state lawmakers declined to approve the proposal by a September 30 deadline.
Fitch Ratings responded to the announcement by removing the Spanish company from its "Ratings Watch Negative" list. The ratings firm believed Abertis would have had trouble raising the $3 billion in capital needed to begin the Turnpike takeover. Although Governor Edward G. Rendell (D) promises to bring back the proposal next year, analysts remain unconvinced that this will happen as available credit dries up and motorists continue to avoid toll roads.
"Fitch believes there is only a slim chance that Abertis will resurrect the deal," the ratings company said in an announcement last week. "The outlook also reflects a slowdown in the road traffic in Abertis' core Spanish and French markets as macroeconomic conditions worsen and oil prices remain high."
A rival effort to impose tolls on Interstate 80 likewise failed to gain support.