REDUCING tolls to drive more traffic through the Limerick Tunnel - and offset the millions the state is paying in subsidies - just isn’t economical, the general manager of Direct Route Limerick has said.
Don O’Sullivan was reacting to calls from Cllr Joe Leddin to reduce tolls as a way of decreasing the burden on the state of the revenue guarantee clause in the contract between the NRA and Direct Route.
This allows for payments from the state in the event of traffic not reaching projected levels.
Cllr Leddin said this was currently costing the taxpayer €6 million a year and could result in the state “forking out an additional €162 million over the lifetime of the current agreement”.
A trial to exempt heavy goods vehicles from tolls during November had been successful in increasing by 70% the number of articulated trucks using the tunnel during the month, said Cllr Leddin.
And Cllr Leddin has said an alternative to the phenomenon of trucks avoiding the tunnel could be to ban them from the city centre, especially when City Hall was spending millions on street improvements.
In response, Mr O’Sullivan said Direct Route had “supported the Department of Transport’s toll-free initiative for HGVs in November”. “It was a good idea and it provides us with good information on traffic flows through the city,” he said.
“We want to be constructive and we are happy to support any such proposals from Limerick City Council or indeed from the NRA. We do have plenty of capacity and then there are the benefits of taking HGVs out of the city centre in terms of environment, congestion and safety.”
But Mr O’Sullivan had reservations about reducing the tolls.
“In relation to reducing the toll to increase the traffic through the tunnel, if we did discount the charges there would be a loss in toll income and we could not sustain this loss,” he said.
A scenario presented by the Limerick Leader of halving tolls to double the traffic “might be correct in theory but the background demand simply is not there to increase volumes by that order”, Mr O’Sullivan said.
“Even if the volume of HGVs for example were to increase by 70%, that would not be sufficient (to stop the guarantee payments from state). The economics of discounting are not in our favour.”
He pointed out that when trucks were banned from Dublin city centre, they were granted free passage through the Port Tunnel.
“But a truck ban is something that could produce benefits all round and is something the City Council could perhaps examine,” Mr O’Sullivan said.
While credit rating agencies have said Direct Route is likely to be reliant on state subsidies for the remainder of its concession, Mr O’Sullivan said the amount would reduce as senior debt was paid off.
The NRA has previously defended the clause as necessary to offset the risk private sector investors were taking on in such a major scheme.