Junta gets the cash to finish the Almanzora motorway

Despite Andalusia having gone bankrupt, the Junta continues to promise large scale infrastructure projects. And to finance these grandiose scheme, someone in power had a Bad Idea. Namely, a private-public partnership scheme in which the private sector finances the work, in exchange for the right to milk it royally over the next xx years.

In the case of the Almanzora motorway, the Junta has -somehow, backs of sofas come to mind- scrounged 160 million euros, some public cash, some private. This is enough to build a cheap dual carriageway through mountainous terrain, connecting Purchena with the A-7? I doubt it. The A-92 come to mind – built with shoddy materials, to a rush date (the ’92 expo in Seville), the Granada mountain stretch has spent the last two decades falling into the valleys below and then being rebuilt.

In exchange for stomping up cash, the “private sector”, in reality the usual mix of large consortiums that control such schemes in Spain, are given gold plated maintenance contracts that allow them to charge the Junta through the nose everytime a pothole appears. All the more reason for not building it too well to begin with….

The Junta says it will spend 2,500 million euros in private-public partnerships over the next five years, a staggering amount, which will be spent bit by bit so as not to dry up the resources. 770 million euros this year will be signed off on new contracts.

It’s worth spending a minute pondering just how this enormous outlay will affect the regional economy. One presumes that the money coming from the private sector is being underwritten by the banks, which are relying on their (dubious) real estate portfolios to underwrite these loans. A lot of these loans traditionally come via the Cajas, which are of course all folding, merging or going bust. We’ve seen this with CAM, which has just been quietly nationalised after it’s outstanding debt became a hell of a lot larger than its assets, which were mainly in real estate. CAM’s bank balance didn’t change, what changed was the value of the property assets it held, whose value keeps dropping. Will these companies be able to stomp up the cash in two years time?

What the hell, it’s the promise that counts. After all, elections next year.

The PP-A has kept quiet on the private-public consortium plan, although it’s worth pointing out that in Galicia there is a huge backlash against these plans. The budget council of the Xunta has said that “it’s not the way forwards”, something echoed by citizens council Plataforma (ABC).

Here’s an example of why it’s a bad idea: Plataforma says that the cost estimates for the new Vigo hospital were originally 250 million euros. Built in a private partnership, new cost estimates have balloned to 1,800 million euros over 20 years. Plataforma says that if the scheme is repeated, the public health service in Galicia will collapse, period.

 

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