Shadow Toll System is Replaced

Author:Mr Pedro Melo
Profession:A.M. Pereira, Saragga Leal, Oilveira Martins, Judice & Associados

First published in International Law Office, November 29 2004

The concept of shadow tolls was born in the United Kingdom in the early 1990s, and thereafter was adopted by several other European countries. In light of budget constraints, this model was implemented in Portugal in order to develop a significant part of the National Road Programme. Consequently, and with a view to building new road infrastructure, the Portuguese government entered into seven concession agreements using the shadow toll model in 1999.

On September 30 2004 the Portuguese government announced its decision to discontinue the shadow toll system in favour of a real toll model. Again, the main reason for this decision lies in budget difficulties: the government's payment obligations in connection with the shadow toll system are not compatible with the need to spend on improving and maintaining the other national motorways.

Apart from the logistical, technical and financial challenges that will arise from the decision, implementation of the change will necessarily involve negotiations not only with the relevant concessionaires, but also with the European Investment Bank (which finances around 50% of the shadow toll projects), as well as with the national and international financial community which has granted financial support to these projects. How the Portuguese government will handle these tripartite negotiations is still open to question, and will inevitably have an impact on the feasibility of future projects requiring national and international banking support.

Government Resolution 157/2004 on the modification of the current shadow...

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