‘Astounding’ costs of Limerick Tunnel guarantee

Mike Dwane

Reporter:

Mike Dwane

Toll guarantee clause at the Limerick Tunnel cost taxpayers �5m in 2012
DEPUTY Kieran O’Donnell has demanded more rigour in state contracts after it emerged the Limerick Tunnel and another road scheme could cost taxpayers €30 million over the next three years.

DEPUTY Kieran O’Donnell has demanded more rigour in state contracts after it emerged the Limerick Tunnel and another road scheme could cost taxpayers €30 million over the next three years.

Under a revenue guarantee clause, taxpayers shelled out just under €5 million to Direct Route Limerick - a consortium that includes AIB, Sisk, Roadbridge, Lagan Holdings and Austrian firm Strabag - in 2012 as traffic figures fell short of projections.

According to the NRA, the clause was needed to secure private interest in a €600 million scheme. But Minister Leo Varadkar has signalled no such clauses will be included in future road projects.

In a reply to a Dail question to the minister from Deputy Eoghan Murphy, which was forwarded to the NRA, it is stated that over €30 million could be paid out by the state between now and 2015 under guarantees inserted in the Limerick Tunnel and M3 Kells to Clonee PPP schemes. No breakdown is available for the Limerick scheme alone.

Deputy O’Donnell has described the figures as “astounding” but also stressed the importance of the tunnel to the regional economy.

Contracts had been entered into by the state under the last government but these could not now be ripped up in contravention of contract law.

“The tunnel is of benefit to Limerick and the region and what we must do now is examine ways to make the tunnel contribute more in terms of revenue and not burden the taxpayer. We must look at ways in particular of encouraging more trucks and heavy vehicles to use the tunnel and the minister has proposed a toll holiday for the month of November in that regard. If more toll revenue was to be generated, there would not be as much demand on limited public resources and we could spend on more infrastructure projects that are needed in the Limerick region,” said Deputy O’Donnell.

But as vice-chairman of the Public Accounts Committee, he added there were clear lessons on how state contracts should be drawn up in future.

“We have to look at the methodology that was used and allowed this situation to develop. Was the stress-testing rigorous enough and was there peer review?” he said.