"Texas is regarded as the toll road El Dorado."
February 27, 2007
David Nason, New York correspondent
THE Sydney-based Macquarie Infrastructure Group will know tonight if it has garnered an early slice of the vast toll road riches up for grabs in Texas.
The announcement by the Texas Department of Transportation of the winning bidder for State Highway 121 - a planned 42km toll road in northern Dallas, one of the fastest growing areas of the US - shapes up as the first big test of MIG's decision to all but jettison its Australian routes for a shot at the far larger but less developed US markets.
Texas, which is forecast to double its population to 50 million by 2030, is regarded as the toll road El Dorado, with the SH121 project the first in an estimated $US250 billion ($315 billion) worth of roadwork and toll road administration to be privatised in the Lone Star state over the next decade.
The biggest prize is expected to be the new Trans-Texas Corrider, a toll road that would stretch from the Mexican border to Oklahoma and utilise some existing freeways and toll roads.
An MIG-led consortium is one of five shortlisted bidders for the rights to build and operate the toll road for 50 years. The deal is expected to net Texas an upfront payment of about $US2 billion and a share of toll revenues.
Like many states, Texas is reluctant to raise taxes to address its chronic shortfall in transportation infrastructure and has been forced to go to the private sector.
All up, more than 20 states are considering the sale or lease of major highways. They include Oregon, Indiana, California, Utah, Colorado, Illinois, New York, New Jersey, Delaware, Pennsylvania, Virginia, North Carolina and South Carolina.
But opposition to public-private partnerships, also known as PPPs, can be strong, especially in the case of public assets that are debt-free.
In New Jersey overnight the state legislature's transportation committee was due to debate proposed legislation that would require voters to approve the sale or lease of any state asset worth more than $US100 million.
The legislation would also ban foreign companies from any involvement.
MIG has expressed interest in the state's busy New Jersey Turnpike and Garden State Parkway which could earn the state $US15 billion for a 75-year lease.
At last year's Merrill Lynch's Australian Investment Conference in New York, MIG chief executive Stephen Allen warned that US-based competitors would exploit xenophobia to keep foreign companies from lucrative US toll-road opportunities.
"It is a real issue and it's one we need to deal with," Mr Allen said at the time.
"The market here is going to get more competitive. All the major investment banks are all starting infrastructure funds. In the marketing, they'll be promoting the US side of the business."
Ironically, MIG's main opposition for SH 121 is expected to come from two foreign consortiums - one led by Sweden's Skanska BOT, the other by the Spanish Cintra group.
MIG's consortium partners are Kiewit Texas Construction LP, a division of leading US transportation contractor Kiewit Corp, and Texas highway constructor JD Abrams.
MIG currently has an interest in four US toll roads. In 2005 Chicago leased its I-90 Skyway to an MIG-Cintra consortium for $US1.83 billion to pay off city debt and fund non-transportation projects. In 2006, Indiana leased the partners the Indiana Toll Road for $US3.85 billion.
Earlier this month the Macquarie Media Group paid $US80 million for American Consolidated Media which publishes 40 community newspapers and shopping publications serving nine communities in Texas and Oklahoma - many of them along the proposed route of the Trans-Texan Corridor.
The sale has drawn criticism the newspapers will become propaganda vehicles for MIG.
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