Mr. Seamus McCarthy:

Transport Infrastructure Ireland, TII, was established on 1 August 2015 through a merger of the National Roads Authority and the Railway Procurement Agency. The primary function of TII is to provide quality transport infrastructure and services. Its main responsibilities relate to the construction, repair and maintenance of the network of motorways and national primary and secondary roads, and the construction, maintenance, and operation of the Luas light rail system in Dublin. In addition, TII acts as the payment agent for grants to local authorities for local and regional roads on behalf of the Department of Transport, Tourism and Sport. The Department retains decision making over the allocation of the funding, and is responsible for the oversight and monitoring function for those roads.

The financial statements for TII for 2016 received an unqualified opinion. TII's income in 2016 totalled €1,078 million. This sum included State grants of €919 million from the Department of Transport, Tourism and Sport's Vote; road toll income of €137 million, mostly from the M50 and the Dublin Port tunnel; and other income of €21.7 million. TII's expenditure in 2016, including interest and other finance charges, amounted to €911 million. Over 90% of TII's recurrent expenditure in 2016 was related to payments in respect of the road network. In 2016 TII paid local authorities just under €200 million for national primary and secondary roads and, on behalf of the Department, €371 million for regional and local roads. TII also paid almost €87 million in operational payments for public private partnership road projects, plus €29 million in related finance charges. It paid €49 million in respect of tunnel and tolling operations, plus €7.4 million in related finance charges. Its administration charges amounted to €22 million in the year. In addition to its recurrent expenditure, it invested over €230 million directly in transport infrastructure in 2016.

TII has undertaken a significant number of PPP projects as a means of providing a substantial part of the national motorway network and related service areas. Eleven public private partnership road projects were in operation in July 2017, with a further three under construction. The M17-M18 motorway has since been opened.

Chapter 4 of my report on the accounts of public services 2016 aims to provide an overview of and update on public private partnerships. I previously reported on such projects in my 2012 report. Apart from recording the agreement of new PPP deals in the intervening period, the chapter identifies notable developments in three areas in respect of TII's PPP projects. A number of risk-sharing arrangements in place for road schemes have given rise to significant income for TII in the period reviewed. They arose from contract provisions for toll revenue-sharing and insurance cost rebates. Requesting variations after a PPP contract has been agreed or a motorway has come into operation will, in general, lead to additional costs for TII. Such variations requested in the period 2013 to 2016 have added costs for TII estimated at a total of €13.3 million. It has incurred additional expenditure in respect of two contracts which included provision for guaranteed payments to the private partner where traffic levels fell below specified floor levels set out in the PPP contract. In 2016, €1.2 million was paid to the private partner under the M3 Clonee-Kells contract and €4.6 million in the case of the Limerick tunnel contract. As the diagrams shown on screen illustrate, the guaranteed payments under the M3 project are projected to end in 2019 in a medium traffic growth scenario. However, annual traffic guaranteed payments are expected to continue for the full duration of the Limerick tunnel contract. TII provides on its balance sheet for the projected future expenditure under the guarantees, estimated at €133 million on a current net value basis.

Road projects account for over one half of the projected future payments under PPP projects. Post-implementation review of PPP projects is important in identifying lessons that can be learned for future projects. Publication of such reviews would assist in improving accountability for and public understanding of whether PPPs achieve value for money. To date, TII has reviewed nine road projects, but the results have not been published. The Secretary General of the Department of Public Expenditure and Reform has committed to including a requirement to publish post-project reviews, subject to redaction of any commercially sensitive information, in a revision of the public spending code under way and revised PPP guidance to be issued in the near future.