Regulation and licensee companies in the Italian highways network

1. Regulation and licensee companies in the Italian highways network Andrea Greco Università degli Studi di Bergamo Dipartimento di Scienze Economiche Facoltà di Economia andrea1980@tin.it Highways: costs and regulation in Europe Bergamo, November 26th - 27th, 2004

2. 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

3. From the second world war until 1975 • 1954: 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 1970 • 492/1975: Construction of new highways was forbidden

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

5. 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

6. European highays network in 2000 • Germany: 11712 • Italy: 6478 • France: 9766 • Spain: 9049 • UK: 3612

8. Highways and traffic trends

9. ANAS • Manages 20 000 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

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

11. 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)

12. 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

13. Annual income

14. Market structure • Autostrade per l’Italia: 3400 km • Astm – Sias group: 1000 km (8 companies) • ANAS: 894 km • Autostrade del Brennero: 314 km

15. Main data from Autostrade budget

16. Main data from Autobrennero budget

17. 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

18. 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

19. Thanks for your attention