Croatian motorways: Bina Istra and Zagreb-Macelj
The Bina Istra (Istrian Y motorway) and Zagreb-Macelj (Slovenian border) are the only two motorways constructed using PPPs in Croatia so far, with the Zagreb-Rijeka motorway being constructed by a concessionaire owned entirely by the Croatian government.
The two PPP concession contracts were negotiated with single bidders, making it:
“unlikely that they offer best value, though this is not easy to confirm, due to the lack of best value reviews undertaken to date, and the lack of available time and data/records to carry out a more detailed benchmarking exercise at this stage.”
(Source: Atkins Consultants (p. 57-59) (pdf))
In an overview Atkins consultants pointed to poor quality guarantee systems in the concessions contributing to a lack of value for money and user benefits.
In both cases the Croatian government (or HAC, the government-owned motorway company) owns 49 percent of the project company, and the state supports the project in the event that projected traffic volumes fall below certain levels.
Additionally, the project finance packages have relied heavily on Croatian government support, which effectively guaranteed debt service to project lenders, regardless of how the schemes perform. Therefore little risk has been transferred to the private sector.
The government’s involvement in the concession companies also means that the schemes still involved public borrowing and therefore an increase in public sector debt.
Lack of competition
Lack of value for money
Lack of risk transfer