The Interstate 77 north of Charlotte (Ferrovial)

North Carolina votes to scrap $650m European PPP toll road six months after work starts

8 June 2016 | By David Rogers 0 Comments

The North Carolina House of Representative has voted overwhelmingly to cancel a European-led public-private partnership (PPP) scheme to upgrade an interstate highway in North Carolina more than six months after construction work started.

Legislators voted after a State Representative argued that the controversial PPP scheme led by a Spanish infrastructure group is “inherently flawed” and would “take $10bn out” of the local economy.

The bill will now go before the state’s senate, which is due to vote on it before the 1 July recess. 

The Interstate 77, which runs through the city of Charlotte, was being widened by a consortium led by Ferrovial subsidiary Cintra and including Ferrovial Agroman and US contractor WC English.

This team was named preferred bidder in April 2014 and financial close was reached in May 2015. Construction work began the following November.

The scheme, which has a construction value of $647m, was procured on a design, build, finance, operate and maintain basis. The “operate and maintain” portion was to have lasted 50 years, beginning on the day the upgraded highway opened to traffic.

The extra lanes that were being added to the road, from Charlotte north to Mooresville, would have been free to use by vehicles with multiple passengers, but other drivers would face a sliding scale of fees depending on the level of traffic, enforced using electronic means.

The vote was taken on a bill put forward by Representative Charles Jeter. Jeter told his colleagues in the North Carolina House of Representatives before the vote: “The reality is this contract I believe is inherently flawed, and I’d be derelict not to try to cancel it on behalf of my constituents.” The assembly then voted 81 to 27 to cancel the deal.

The cancellation could result in penalty of between $80m and $300m.

The reasons given for the decision to break the contract were that the project was “not in the state’s best interests”, the location of on and off ramps would hurt local businesses and that the state would be unable to add non-toll lanes to the road for the life of the agreement.

Jeter told local television station WSOC that the state can cancel the contract for cause, without paying a penalty.

He said: “We’re not asking for anything special. All we’re asking for is to have our road treated like all other roads in the state are and not to have a private operator run a toll road in our area that's going to take $10bn out of our economy.”

Photograph: The Interstate 77 north of Charlotte (Ferrovial)