Friday, December 22, 2006

Pennsylvania politicians seek quick cash; hope to privatize the Turnpike

Australian, Spanish companies offer U.S. state help in leasing toll road

December 22, 2006

The Associated Press
Copyright 2006

HARRISBURG, Pennsylvania: More than 40 companies, including some from Australia and Spain, met Friday's deadline to offer their help to state policymakers who want to determine the value of leasing the Pennsylvania Turnpike, officials said.

Among the parties expressing interest were Spanish highway and infrastructure company Abertis Infraestructuras, Texas-based construction manager Fluor Corp., and Australian toll road developer Transurban Group., as well as investment banks, private equity firms and major auditing firms.

The deadline came two weeks after Gov. Ed Rendell announced plans to solicit interest. The companies were asked to submit a document of no more than eight pages that would introduce their firm, relevant experience and expertise that the state may need on such a transaction.

"The instructions we sent out to the world were, 'Tell us what kind of help we need,'" said Rich Kirkpatrick, a spokesman for the state Department of Transportation.

Once the submissions are reviewed, the state plans to invite some firms to make presentations that would address issues such as estimating the value of privatizing the 537-mile (864-kilometer) highway network. The state could eventually pay the firms as consultants on the transaction.

However, Kirkpatrick said the state has no timetable for when it will take the next step. He also said he was uncertain whether the submissions were public record, and said he could not release them because the state has not reviewed them yet.

The idea of leasing the turnpike surfaced earlier this year as a way to get a huge influx of money to solve the state's problems of crumbling highways and bridges and struggling mass transit agencies. Rendell has cited a study that showed Pennsylvania could garner anywhere from $2 billion to $30 billion (€1.52 billion to €22.74 billion) from privatizing the turnpike.

The Pennsylvania Turnpike Commission also responded, although a spokesman did not know what was in the commission's filing and could not immediately provide a copy.

"All I can say about it is that we made a submission outlining our recommendation on how we can help close the gap that exists in highway funding and mass transit funding that exists in the state," spokesman Carl DeFebo said.

Such a transaction with a private company can work in various ways. Generally, a private investor would pay the state to assume control of a highway, then recoup the cost of the upfront payment, plus interest, by raising tolls or usage fees over the life of the agreement.

© 2006 The Associated Press: