THE Government yesterday raised the prospect of privatising the Metro North light-rail project in order to get it built.
Transport Minister Leo Varadkar said if the private sector fully funded the project, then he would allow it to retain all the fares for up to 100 years.
The move comes because of concerns about public-private-partnership projects (PPPs) collapsing due to the economic downturn. Senior officials at the Transport Department have advised the minister that securing the funding under a PPP — where the private sector finances the bulk of construction costs and the State pays back the costs over time — was dependent on Ireland restoring its “financial credibility”.
Two PPP consortiums have been shortlisted to build the 16km Metro North, linking Dublin city centre with Swords, with the cost expected to be paid back over 25 years. The Railway Procurement Agency wants to begin moving utilities, such as telecommunication lines, sewerage pipes and water mains, from O’Connell Street this month in order to allow construction of underground tunnels to take place.
But Mr Varadkar has said he will not approve the works — with an estimated cost of €30m — in case the PPP consortiums pulled out of the project. Some €135m has already been spent on it. “I don’t want to dig up O’Connell Street for 2016, where all the statues would be removed, only for the PPP company to say they’re not going ahead,” said Mr Varadkar.
“Metro North is part of a review of investment in transport projects. I would expect to make a decision on that (enabling works) before the summer. “The roads PPPs have more or less fallen through. Does anyone think that’s going to change a lot in the next few years?
“If it does not, it means the Exchequer needs to put up billions for Metro North and that’s not going to happen.
“We’re looking at allowing the National Pension Reserve Fund to lend money for transport projects and a long shot is offering it to sovereign wealth funds to do the entire project and take a 50- or 100-year lease.”
Metro North was given priority under the last government’s four-year capital investment programme and the European Investment Bank has already committed to provide €500m in loans.
Risk Planning permission for the line was granted late last year, and up to 4,000 jobs will be created if it goes ahead. Enabling works, which were due to begin this month, would have created 250 jobs this year.
The Department of Transport has warned that there is a risk to the project because of economic circumstances and the IMF/EU bailout. “Financial close for the Metro North PPP will be dependent on Ireland’s financial credibility internationally and on the prevailing position of the international funding markets,” it said in briefing notes to the minister.
Meanwhile, just €65m in construction projects were awarded by the State last month. The Construction Industry Federation said government spending was 11pc behind target so far this year and that up to half of all projects that had been publicly advertised might never go ahead. These include schools, water services and telecommunications projects.