Introduction
Construction of New International Airport
Development of TGV Network
The Hospital Programme
The Future of Shadow Toll Roads


Introduction

The new Portuguese government is expected to continue to develop infrastructure projects on the basis of public-private partnership (PPP) schemes. The aim is to stimulate the domestic economy and reduce unemployment rates, without further increasing budgetary constraints. However, uncertainty remains as to which route the government will follow in several sectors.

Since the Socialist Party won the elections on February 20 2005, there has been some speculation about:

- the possible construction of a new international airport and a third bridge over the river Tagus;
- the timeframe for the development of a high-speed railway ('TGV');
- the uncertainty over the Hospital Programme; and
- the uncertainty over shadow toll roads.

Construction of New International Airport

The debate about whether to construct a new international airport seems far from resolved. The estimated cost of building a new international airport is very high (approximately €3 billion) and a number of international transportation experts have criticized the idea, asserting that Lisbon airport has the capacity to expand.

Development of TGV Network

On the contrary, it seems certain that the TGV project will be developed over the coming years. A public company was set up in 2000 to manage, among other things, the construction of the Portuguese TGV. Moreover, the route of the future railway is already defined. The TGV network will cover Western Portugal, linking Faro in the south to Oporto in the north, and passing through Lisbon. The public company will also ensure the interconnection of the Portuguese TGV lines with the Spanish TGV network - connections will be established through Badajoz, Huelva and Vigo. The estimated cost of this project is €12 billion.

In contrast to Spain, which is financing the continued expansion of its network through state funds, Portugal is expected to use project finance schemes. However, there is little information available on how the TGV project is to be structured.

The Hospital Programme

Government decisions are also expected in the health sector. The former centre-right government launched an ambitious programme to build 10 new hospitals under a PPP scheme, and apparently this programme will not be abandoned. The current PPP model is unique in the world. It involves a dual concession agreement: a 30-year concession contract for the design, construction and maintenance of the buildings, and a 10-year concession contract for the provision of clinical services. The infrastructure company and the health company are covered by a facilities utilization contract. Nevertheless, this model may be reviewed to adapt it to the classic UK model: a concession contract for the design, construction and maintenance of the hospital buildings, with the clinical services provided by the state health departments.

The Future of Shadow Toll Roads

The former government wanted to end the current system of shadow toll roads in favour of a real toll road model. Before the elections, the Socialist Party argued that the termination of the shadow toll system was unfair. However, since the budgetary difficulties that led the former government to announce this termination have not been overcome, the intentions of the Socialist government remain uncertain. Meanwhile, negotiations with the concessionaires towards the introduction of a real toll model are no longer in progress.