Private Financing of Road Infrastructure: The Portuguese Experience

A well-balanced road network is essential for promoting equity of chances across a territory; it allows the populations to make easy use of what increasingly is viewed as the fundamental right of mobility. Portugal has lagged behind in the standard of its roads with respect to most European countries, and it has been trying to reduce that difference. Traditionally, road financing has come either through state investment or mixed investment (e.g., BRISA’s tolled motorway). However, these alternatives might not be viable in the future. Therefore it was decided to bring private investment into the road construction market. The national road agency tendered six contracts under a design, build, finance, and operate (DBFO) model, for a total of 830 km of roadways. Under each contract, the private sector would build or upgrade a road and maintain it for 30 years. In return, the agency would pay the concessionaire according to the number of vehiclekilometers driven on the roads (i.e., shadow tolls). The Portuguese government has made preliminary and ongoing evaluations to support its choice of the DBFO model. The first impressions are that the initial judgments of the private sector’s interest in this business—as well as of the advantages for the public and for the population as a whole—are justified. A careful monitoring program allows continuous improvement of the decision model and the negotiation procedures.