Transport Infrastructure Ireland (TII) is to warn politicians that freezing toll road charges now could result in larger increases in 2024.
The State agency’s chief executive Peter Walsh is to outline potential consequences of deferring planned increases in tolls during an appearance at the Oireachtas Committee on Transport on Tuesday evening.
That meeting will take place at the same time as the Dáil is debating a Sinn Féin motion calling for increases – due to kick in from January 2023 – to be scrapped.
There has been division in Government over the issue since plans for the increases for M50 and eight public private partnership (PPP) roads became public earlier this month.
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The timing of the planned increases has been criticised by Taoiseach Micheál Martin and Tánaiste Leo Varadkar, with the Fine Gael leader last week saying attempts will be made to mitigate the impact for motorists.
However, Green Party leader and Minister for Transport Eamon Ryan has indicated in interviews that he had accepted the increases.
The Coalition leaders were expected to discuss the matter last night ahead of Tuesday’s Cabinet meeting.
[ Proposal to scrap road toll increases could leave State on hook for €25mOpens in new window ]
Government sources said there has been no decision on the approach the Coalition will take to the increases and the Sinn Féin motion and that the issue will be discussed by Ministers.
In his appearance at the Transport Committee, Mr Walsh will detail the legislative and contractual context of the operation of the toll roads, explain why the charges are rising and what the revenue is used for.
He will also outline the consequences of deferring toll charge increases and TII’s engagement with the Department of Transport on the matter.
The committee will be told how the then government decided to adopt a PPP approach to fund public capital projects like roads in 1999.
Some €1.75 billion in private finance was later raised by PPP companies to fund the construction, operation and maintenance of road projects.
[ Who runs Ireland's road tolls and who gets the money?Opens in new window ]
Mr Walsh will say that “the payments relating to these services are strictly controlled by the contract conditions” and “revenue from index linked tolls is a core element of these contracts”.
He will say that toll charges are set relative to inflation and how Ireland is currently in a period of high inflation and that the bylaws for toll roads provide for the charges to be reviewed annually.
Mr Walsh says that TII does not have the right to prevent a PPP company from raising the toll charges where its submissions are in accordance with the bylaws.
[ Varadkar rules out ‘cast-iron commitment’ to stop road toll increasesOpens in new window ]
Operating and maintaining the network costs approximately €600 million per year and Mr Walsh will say that the €200 million annual receipts from tolls and €400 million from general taxation is “barely adequate to maintain asset value”.
Mr Walsh also says: “In the event that a freezing of toll charges is agreed, the contractual entitlement to the index linking of toll charges would still exist.
“If inflation continues to rise, this will result in rebalancing of, and consequentially, larger increases to, toll charges in January 2024.”
His opening statement also says that TII “does not have the right to unilaterally change the basis on which PPP toll rates are revised, therefore any proposed change would have to be the subject of negotiation”.
He said any such negotiations “could take many months, if not years, to successfully conclude”.
Mr Walsh will say that freezing M50 tolls alone at 2022 levels would result in a forecast reduction in revenue of approximately €13 million and this would “have to be made up from general taxation”.
The committee will be told that details of how a range of possible inflation rates would affect toll charges were sought by the Department of Transport and provided by TII on September 1st.
