Taxpayer subsidy of €8.7m lifts tunnel operator’s €16.4m profits

Operating profits at the consortium which operates the €800m Limerick tolled tunnel last year more than doubled to €16.44 million.

New accounts show that DirectRoute (Limerick) Ltd last year enjoyed the operating profit surge as revenues soared by 38 per cent from €22.55 million to €31.06 million.

A large contributor to the surge in revenues was Transport Infrastructure Ireland (TII) making ‘operating payments’ of €8.77 million to DirectRoute Limerick last year. 

The €8.77 million is a nine fold increase on the €975,965 paid out under that heading by TII to the consortium in 2020.

As the national road network recovered traffic volumes from the early pandemic hit 2020, the company’s toll income last year increased by 15.45 per cent from €11.96 million to €13.8 million.

The DirectRoute firm also received ‘traffic guarantee’ payments of €8.4 million from TII making up the overall revenue total of €31.06 million. 

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 directors state 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”. 

They add further that “COVID-19 related travel restrictions continued into 2022 but on February 28th 2022 substantially all remaining restrictions were lifted. As a result, and as experienced during the second half of 2021, traffic volumes have been increasing”. 

The firm last year recorded a pre-tax loss of €3.8 million and this is largely attributable to non-cash depreciation costs of €13.48 million and interest costs of €20.2 million.

On the ‘operating payments’ made to the Directroute Limerick, a spokesman for TII said on Tuesday that the contract to 2041 provides for the payment of operation period payments.  

He said: “The OP payments amounts are set out in the awarded contract and vary year to year to pay for significant asset renewal which is required over the entire lifecycle of the contract.  

The spokesman explained: “The increase from last year’s payment to this year’s payment was profiled under the operational contract within the lifecycle of works, these works are required to maintain the overall safety of the infrastructure.”

He said: “This increase was expected as identified within operational payments profile. There will be a substantial decrease in the payments over the coming years.”

He noted that the DirectRoute PPP Consortium was awarded the Limerick Tunnel contract after tendering the least cost bid to the state for the construction, maintenance, and operations of the Limerick Tunnel Project in 2006.

The Limerick tunnel route was first opened to traffic in July 2010 and motorists today pay  €2 to use the tunnel. 

At the end of the concession period in 2041, the firm will hand back the road to the TII. 

The firm had accumulated losses of €88 million at the end of last year. The company’s cash funds increased from €15.25 million to €25.96 million.