Regulation and licensee companies in the Italian highways network Andrea Greco Università degli Studi di Bergamo Dipartimento di Scienze Economiche Facoltà di Economia Highways: costs and regulation in Europe Bergamo, November 26th - 27th, 2004

Before the second world war 1921 The word Autostrada was used for the first time in the Puricelli relation which present a plan for a new kind of road The word Autostrada was translated literally in other language (autoroute, autopistas, autobahn) 1922: the first highways was opened (Milano – Laghi) 1935: 311 km of highways were in operation and 6850 were planned

From the second world war until : end of the reconstruction 463/1955: the law states that highways should be financed itself with a public contribution between 20% and 36%. 729/1961: law updated the public contribution to 52% and unexpected income should be given to the government after the 5th year. Financial costs fixed at 6,5% 3600 km of new highways were opened by /1975: Construction of new highways was forbidden

European highays network in 1970 Germany: 6061 Italy: 3900 France: 1553 Spain: 387 UK: 1183

From 1975 until today The prohibition of construction of new highways were partially abrogated in 1978 Legal limits slowed down new construction Law 190/2002 reduce the power of municipalities in the approval process

European highays network in 2000 Germany: Italy: 6478 France: 9766 Spain: 9049 UK: 3612

Highways and traffic trends

ANAS Manages km of road and 894 of free highways Important participations in the concessionaries Controls licensee, approves investments, fares and financial plan Renews concessions Player and regulator

Price cap ΔT ΔP – ΔX + βΔQ ΔP: inflation expected ΔX: capital remuneration, future investment plan, objective of productivities variation, expected variation in demand

ΔX capital remuneration (clow back: yes or not?) future investment plan (uncertain in incame and time of construction) objective of productivities variation (different for each licensee) expected variation in demand (new alternative)

βΔQ Q = (Ipav)(0.60) + (Is)(0.40) Ipav = (Ia1)(0,60) + (Ia2)(0,40) Is = number of accidents Ia1 = roughness Ia2 = regularity β = value related with the quality of the highways in the last 5 years Problem: effects of speed limits

Annual income YearToll compa nies Warranty Central Fund VATTotal

Market structure Autostrade per lItalia: 3400 km Astm – Sias group: 1000 km (8 companies) ANAS: 894 km Autostrade del Brennero: 314 km

Main data from Autostrade budget Year IncomeEbitaProfitInvestment

Main data from Autobrennero budget Year IncameMOLProfitTunnel Fund

Problem in improving short highways Autostrade concession includes investment for 4235 million (1997) Torino – Savona is a subsidiary owned by Autostrade at 99,9% 206 million of euro were required for improving the highway The total cost was paid by Anas Same problem for the whole group ASTM – SIAS

Conclusion Fast development of highways since 1922 until 1976 Regulatory problem in price cap and ANAS role Interesting profits for concessionaries Problem in financing improvement for short highways

Thanks for your attention