Motorways in Ireland
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@jmkennedyie wrote:
Here’s the strategy from the horse’s mouth. Currently available from the NRA home page.
Just spun through some of the updates on the NRA website …
I notice that the appendix to press release about activity in 06 etc. mentions that Naas Road upgrade will be complete by Q2 06!!! (I understand that the traffic lights at Kill and Johnstown should be history in a couple of weeks when the new flyovers are opened up).
Also, NRA are inviting comments/feedback from folks on following draft documents:
Bat doc contains interesting picture of bat house in Clare (looks like regular cottage), and concept of Green bridges (while normal bridges have railings/walls, green bridges also have trees/hedge growing on the bridge beside the railings).
Landscape doc is quite extensive – 127 pages – focuses on native species, identifies guidelines for various parts of the road (median, verge, boundaries, etc.). Mentioned that motorway art can have (positive) safety implications. Eg. art on Kildare bypass was designed to be visible at night to help keep motorists interested (i.e. awake).(BTW, I’ve tried underlining the URL’s this time to make em a bit more obvious…seems a bit easier to read)
NTR Chairman before Oireachtas committee
02 February 2006 15:01
The Chairman of the firm operating the M50 tollbridge has said the National Roads Authority has not spoken to him about any plan to accommodate trucks that will be obliged to use the M50 when the Port Tunnel opens later this year.Jim Barry of National Toll Roads has been speaking to the Oireachtas Committee of Public Accounts.
He said the M50 was operating at full capacity at the moment, even before the 2,000 extra heavy goods vehicles begin to use it.
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Mr Barry reiterated that the tollbridge was not the cause of congestion on the M50.
The NTR chairman offered to show committee members by helicopter the traffic patterns on the M50. He said these indicated that the gridlock was caused by the roads feeding on to the motorway.
He estimated that the current cost of buying out the toll franchise would be €600 million.
Mr Barry also disclosed that even after the Government bought it out, it would still have to negotiate with his company when it comes to upgrading the 3km section of the M50 for which NTR has the concession, even though the stretch is ultimately owned by the State.
The revelation prompted Fianna Fáil Deputy Sean Fleming to observe ‘shame on whoever negotiated that deal’.
Fred Barry of the National Roads Authority denied there had been any lack of urgency in his body’s negotiations with the tollbridge operators.
However, he told the committee that its legal advice was that the contract with NTR was so vague that it did not provide any legal remedies to the roads authority if it wished to sue over the level of service being provided by the company.
He said the NRA had not sent threatening legal letters over the service provided by NTR, because there would not have been any point.
Should the question not be did CJ do it with Des Traynor or did Des do it with Pee
There have been a number of estimates of the cost of the buy out in the press from €100m to €1b, so here is the first public offer from the owner, €600m. As the concession has 15 years to run, that’s equivalent to €40m per year.
NTR has said that is is making about 35 cent operating profit on the 1.80 toll with 1 euro going to the state and the other 45 cent spent on costs. 35 cent on 100,000 cars a day for a year gives just 12.8 million profit. So something doesn’t add up.
In future years, the extra capacity on the M50 could deliver a 50% increase in traffic to 150,000 cars a day, but even then, NTR should be happy with about €250-300m
The concession requires NTR to maintain the N3-N4 section of motorway in return for collecting tolls but that’s just a cost so NTR is hardly going to demand that they be allowed to continue running that section of road. I guess I am missing something here.
The Flood tribunal suggested Liam Lawlor had been paid 74,000 for a consultancy report for NTR in the early 1990s. This seems such a small amount of money compared to the cost to the state of an over-generous contract. Maybe future major contracts could be amended to allow for termination in the case where undeclared payments were found to have been made to officials by the winning bidder.
At 100,000 cars per day €132,490,278.00
At 150,000 cars per day €198,735,417.10
These are the numbers I was working from:
100,000 cars * .35 profit * 365 days * 15 years = €191,625,000
150,000 cars * .35 profit * 365 days * 15 years = €287,437,500either way it’s nowhere near €600m
I am sure though that those earnings would probably be further invested by the company which would, subject to the vagaries of the market, also involve a substantial increase in the figures. In effect, they could lose more than the total claculated by simply adding up the toll for each car. On top of that, car ownership will also probably increase which would again increase the amount involved.
Actually, just did a quick calculation on an investment programme for the Vienna stock market, as an example.
Based on historic prices, if you invested 100,000,000 euros in 1991 in the Vienna stock market, you would now be sitting on 391,933,947 euros. It seems reasonable then, that if you invested the amount of 287,000,000 you would certainly get back 600,000,000 euros – if historical prices are anything to go by (which of course they are not).
It seems fair then to conclude that the buy out could be worth something in the region of 600,000,000 as is it safe to assume that they will not be stashing the cash away in their local post office but are also counting on further investment returns.
A euro today is worth more than a guarantee of a euro in a year’s time, due to inflation and lost returns.
This is the concept of Net Present Value used when calculatinvg the value of a company based on projected future income.
http://www.investopedia.com/terms/n/npv.aspUnless I have misunderstood you, you seem to suggest that possible investment returns are greater when you invest cash later rather than sooner. This would be untrue. NTR would get a better return by investing 287m cash today than investing an average 19m a year for the next 15 years.
I excluded inflation from calculations because the tolls are index-linked.
Im not an economist so I cannot argue the details. The point I was making, however, is logical. Whatever way you invest the 287,000,000 – whether as a lump sum today or as 19m on average every year for 15 years – you will – in all likelihood end up with more than 287,000,000 in 15 years time. If you invest it in the stock exchange at a rate of 8 – 10% interest and if the markets are good, you will probably end up with a figure of 600m or so.
@PDLL wrote:
Actually, just did a quick calculation on an investment programme for the Vienna stock market, as an example.
Agreed but the object of valuation is to find the Net Present Value and not what may or may not happen at a future date; investment is all about timing.
Frank,
I am unsure as to why you have adopted a 15 year term; the correct method is to adopt the unexpired term i.e. the term prior to the route becoming a ‘right of way’ which is 39 years and one day. This will occur in 2029 i.e an unexpired term of 23 years. The figure cannot be calculated on the basis of a multiple of that number but must be discounted to reflect the fact that the value of one euro in 23 years time is not equal to that of today.
Therefore the only realisrtic method of valuation is the Discounted Cash Flow DCF method; adopting the figure that appears to be typical in the market gives the values I displayed in my earlier post.
Even adopting the risk free rate of 4% returns ceteris paribus are €189796152.30
One would hope and expect that the Government would task one of their busy little economists to work out a fair price before just handing over a fist full of dollars or euros.
@Thomond Park wrote:
I am unsure as to why you have adopted a 15 year term]The NRA says the concession expires in 2020 – 15 years from now.
http://www.nra.ie/PublicPrivatePartnership/ProjectTracker/M50SecondWest-LinkBridge/The figure cannot be calculated on the basis of a multiple of that number but must be discounted to reflect the fact that the value of one euro in 23 years time is not equal to that of today.
Tolls are index linked, so in 15 years they will be charging 1 euro plus 15 years of inflation.This is still worth less than a euro today so long as you can invest risk free above the inflation rate.
That explanation makes a lot of sense
That would give an NPV of €237,551,328.60 allowing for an inflation figure of 2.5% p.a. which is 10 basis points above the Eurozone average
A real Aladdin’s Cave………………………….
Just to ammend your heading. It is not “Motorways in ireland”, it is “Motorways, Dublin and its Hinterland”.
There are no motorways anywhere else in The Irish Republic and never will be and none are planned.I wouldn’t even call them “Motorways” – more like “sprawl facilitators”
We’re under the false impression that Ireland is getting Motorways to link the big urban centres, but really these roads are just being clogged by commuters living ever deeper into the countryside.
While the roads that will be built to Cork, Limerick and Galway will be motorway standard and will have 120km/h speed limits if the _local_ coucils decide, the Fermoy bypass in Cork will be classified as a motorway. Also, how far away from the city that’s paying for it does a road have to be for it to be visible through the blinkers? How about Laois and Tipperary, where the M7/M8 scheme will be built? Or is it the fact that the motorway classification are on roads between Dublin and other cities, where the traffic levels warrant them, that irks you?
@Andrew Duffy wrote:
While the roads that will be built to Cork, Limerick and Galway will be motorway standard and will have 120km/h speed limits if the _local_ coucils decide, the Fermoy bypass in Cork will be classified as a motorway. Also, how far away from the city that’s paying for it does a road have to be for it to be visible through the blinkers? How about Laois and Tipperary, where the M7/M8 scheme will be built? Or is it the fact that the motorway classification are on roads between Dublin and other cities, where the traffic levels warrant them, that irks you?
And presumably Waterford?
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