Spain needs to carry out 814 priority infrastructure projects that will create 994,120 jobs

25/04/2017 (Spain)
Spain needs to carry out 814 priority infrastructure projects that will create 994,120 jobs

SENER and the Association of Infrastructure Construction and Concession Companies (SEOPAN), have submitted a report entitled ‘Analysis of Investment in Priority Infrastructure in Spain’ which details 814 selected priority infrastructure projects for a total investment of 103.780 billion euros. The report focuses on four priority areas: water, environment, transport, and urban development, which will generate 994,120 jobs, 78.907 billion euros of associated economic activity, and 50.851 billion euros of fiscal return*. As these are all investments which are—or have already been—in the planning stage, they could be implemented in the period 2017–2021.

In the care of the water and environment projects, the investments are justified based on compliance with the targets imposed by European Directives and, for the transport and urban development infrastructures, on social return on investment criteria related to cost–benefit analyses, in accordance with the method used by the European Commission (EC).

In the area of water infrastructure, 510 priority actions are proposed representing 12.014 billion euros of investment in 15 types of hydraulic infrastructure, 38% of which are classed as basic (required by regulations). The proposals focus on hydrographic planning for the period 2017–2021 and ensuring compliance with Directives 2000/60/EC and 2007/60/EC and Spanish Royal Decree Law 1/2001, which include the principle of the full recovery of the costs of water services.

The SENER report also proposes another 32 priority initiatives amounting to 6.522 billion euros of investment in environmental infrastructure for to municipal waste treatment and ensuring compliance with Directive 2008/98/EC, Spanish Law 22/2011, and the National Framework Plan for Waste Management 2016/2022. The targets for the percentage of biodegradable material and the prohibition of dumping untreated waste in landfills are not being met, which resulted in the EC filing a case against Spain with the European Court of Justice in 2015 to force it to adopt the correct measures.

Finally, 272 priority actions totaling 85.244 billion euros of investment are proposed, covering seven types of land transport infrastructure works for goods and logistics (51 km), access to cities (1,066 km), secondary networks (460 km), capacity management (3,762 km), and urban mobility (144 km).

“This report is not an exhaustive list of all the projects that would have to be undertaken, rather it lists the priority measures, based on the available public information, whose implementation in the short-term is vital for the country,” explained Jesús Planchuelo, Director of Civil Engineering at SENER.

The study is based on the conclusions of the consultancy firm A.T. Kearney in its report “Priority Areas for Sustained Investment in Infrastructure in Spain,” which was published at the end of 2015 and identifies eight priority areas that require a sustained investment of between 38 and 54 billion euros per year over the next decade.

“Investing in this priority infrastructure is essential for our country and represents a commitment to our future. The current budget constraints cannot be used as justification for not facing up to our responsibilities”, explained Julián Núñez, Chairman of SEOPAN.

In this regard, SEOPAN, together with the law firms Deloitte and Uría Menéndez, has published the follow-up report “Toward an Efficient Public-Private Partnership Model”, setting out the keys to an efficient concession model that would help attract the necessary private investment and minimize the effects of infrastructure investment on the public deficit.

Deloitte and Uría Menéndez have carried out a detailed analysis of the shortfalls in Spain’s regulatory framework and concession practices, together with the success factors of a large number of different types of international infrastructure concessions. They concluded that the common factors in the success stories analyzed are that they minimize the possible time and cost overruns of projects, attain a balanced and efficient transfer of risk to the private sector, making good use of innovative financing mechanisms, all with high levels of predictability and legal security for investors.

“The report identifies a series of inefficiencies and uncertainties posed by our legal regulations and the distribution of powers between public bodies that need to be overcome to attract investors to fund infrastructure in Spain”, remarked Mariano Magide, a partner at Uría-Menéndez.

The study highlights the fact that to attract the large and growing liquidity existing in the markets in order to make the necessary investments, frameworks for public-private partnerships (PPPs) are needed. Javier Parada, Director of Deloitte Infrastructure Spain, added: “these frameworks offer the most viable investment alternative taking into account impact on the public deficit and the streamlined management that comes from having a single contract for the design, financing, construction, and operation of infrastructure”.

*According to the results of the SEOPAN report at the end of 2014 “Fiscal return and employment generated by investment in infrastructure”.

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