The taxpayer last year picked up the tab for the sharp decline in toll income for Limerick city’s €800 million River Shannon tunnel.
Accounts for the private consortium operating the tolled route that includes the 900-metre tunnel under the River Shannon that acts as a bypass to Limerick city, received Traffic Guarantee payments from Transport Infrastructure Ireland (TII) of €9.6 million in 2020.
The Traffic Guarantee payments to DirectRoute (Limerick) Ltd increased from €3.88 million in 2019 to €9.63 million last year as toll income declined by 29 per cent from €16.76 million to €11.96 million due to the Covid-19 lockdown impact on traffic volumes.
The jump in Traffic Guarantee payments resulted in overall revenues for DirectRoute (Limerick) Ltd increasing marginally from €22.25 million to €22.55 million last year, in spite of the pandemic impact.
A spokesman for TII stated on Friday: “Since the traffic levels dropped significantly during the Covid-19 crisis, the traffic guarantee element of the contract required that payment.”
The directors’ report attached to the DirectRoute Limerick accounts states that “the overall financial performance of the company has not been impacted by reduced traffic volumes as a result of Coronavirus due to traffic guarantee payments.”
On the continuing impact of the pandemic resulting in lower traffic volumes since the end of last year, a note attached to the accounts states that “as the project currently benefits from a traffic guarantee from TII, the company does not anticipate any material reduction in revenue or impact on financial position attributable to the pandemic”.
The traffic guarantee payments are made when daily traffic volumes don’t exceed 23,000 and they were put in place at the outset of the project in order to attract consortia to bid to build the scheme.
The 2020 accounts show that the firm last year recorded pre-tax losses of €10 million.
However, the pre-tax loss is largely due to the large non-cash depreciation cost of €13.4 million incurred last year and finance payments of €18 million.
According to the directors’ report “the largest expense remains interest repayment on the project funding mainly in the form of bank loans and bonds"
The Limerick tunnel route was first opened to traffic in July 2010 and motorists pay €1.90 to use the tunnel.
DirectRoute Limerick signed the 35-year toll contract from August 2006.
At the end of the concession period in 2041, the firm will hand back the road to the TII.