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IntroductionThe French concession system is a tool that serves mobility and land-use planning.
For almost 60 years it has helped the State to develop a motorway network of more than 9,330 km of high quality, maintaining the land-use planning management.
Within the context of contracts concluded with the State and under permanent control, the concessionary companies receive a public service mission for the financing, construction, operating and maintenance of a motorway with the toll collection in compensation. At the end of the concession, the whole toll structure goes back to the State.
Through the concession contracts, the State chose to finance the motorway network with toll collection instead of tax, a saving system of public resources: only road users pay depending on their journey; this system implies a contribution from all the users, whether or not they are French residents. The State being free from any financing constraints had the chance to launch several projects simultaneously to address the needs of land-use planning and to redress some territorial imbalances.
The central role of the StateThe French state chose the toll concession to develop the motorway infrastructure network.A contract is then concluded between the conceding State and a concessionary company for the financing, construction, operating and maintenance in exchange of a toll collection for a fixed period.Under that contract, the State decides on the missions to be entrusted to the concessionary company and also the expected level of management. It ensures that the commitments are honoured by the concessionaires through a performance indicator system evaluating the quality of service and the infrastructure.
The road-charging policy is established by contract according to the inflation and on the basis of the investment programme that the State asks to the concessionaire. The State decides and controls toll increases, which are clearly indicated in the concession contracts.
The state plan contracts, reviewed every 5 years, give the State and the concessionary company the chance to plan the investments and the cost increases for each year.
The concessionary companies bear “at their own risks” the imponderables linked to the financing, construction, operating and the traffic.
Benefits of the concession system
On the concession model, the concessionary companies had the opportunity to make the motorway a place for mobility, safety and services. This network is five times safer than the secondary network; continuous investments have enabled the deployment of services matching the evolution of mobility (traffic information, renovation of rest areas, electronic toll services, development of electric recharging points, car-sharing car parks, etc.) and to minimise the impact of the infrastructure on the environment (close to 15 billion euros invested since 2014).
The economic model of concessionFrom the beginning of the project, the infrastructure concession involves high raising capitals and thus a huge debt.During the first years of the concession contract, which correspond to a progressive growing traffic, the results of concession are usually low, even bad. It is only over the years, once the traffic has reached its cruising speed that the results achieved enable investment depreciation, the reimbursement of the loans taken out, and finally the remuneration of invested capital. This important time lag during which the concessionary company assume the risks linked to the operation and to the traffic level.
The high level of debt that the motorway concession contracts represent can only be bearable thanks to the toll revenues paid by the users. Beyond the infrastructure operating and maintenance costs, it also covers the financing costs (interests) and the reimbursement of a large part of the debt. This way the debt incurred is totally assumed by the concessionary companies, in most cases without any guarantee from the public authorities. Unlike the investments made within a traditional budgetary framework, the infrastructures made through concession contracts do not affect the public finances. The toll revenues ensure the continuity avoiding a requalification of the sovereign debt.
The backing, the key stone of the concession systemThe development of the motorway network has been possible thanks to the backing principle. The plan is to use the revenues and the investment capacities of a mature concession in order to subsidize part of the less profitable network, satisfying the needs for land-use planning, and extending the duration of concession for the mature network. The new borrowings contracted by the concessionary company in order to finance the new investments are secured by the toll revenues of the existing network. This is the reason why the motorways built during the 60s will only be depreciated at the end of the concession contracts.
The reform of 2000 put an end to the solidarity system between the territories to foster competitiveness for the construction of new sections. Since then, each new project must be subject to a European call for tender. The consequences of the uncertainty regarding the backing were immediate for the new concessions operating relatively short sections (from 18 to 150 km) and making prices higher than the “backed” networks; the concessions have then to use public subsidies in order to balance their concessions with a deadline of 2060 or 2070.
Historical benchmarks
Founding law: Law of 18 April 1955: the State receives the authorization to create concessionary companies for the construction and operation of motorway infrastructures.
From 1956: creation of 5 public companies
1960/1969: construction of 1,010 km
1970/1979: creation of 4 private companies and construction of 2,723 km
1980/1989: creation of two new companies for the construction and operation of the alpine tunnels and construction of 1,782 kmIn front of the financial difficulties faced by a certain number of companies, the State decided to group them with other companies financially stronger and closer geographically speaking or take back the capital.
1990/2000: creation of 3 groups and construction of 1,850 km with the backing systemThe smallest companies become subsidiaries of the biggest ones, forming three big regional groups:
From 2000 to 2006: the context of the concessionary companies face big changesPublic companies become ordinary companies and European calls for tenders are opened for any new concession. New companies are created for each new concession (ALIS, Eiffage-Viaduc of Millau, ARCOUR, ADELAC, A’liénor). Each concession must be financially balanced. The relationships between the State and the concessionaires are subject to contracts in two fundamental documents: the specifications and the corporate contacts.
2005: the State initiates the procedure to totally privatise the three big companiesThe traffic risk is passed to the private sector on the eve of a big political change.
2006: privatization of concessionary companies
2010: ‘Green packages'
The French government has asked the motorway companies to draw up a ‘green development’ programme. The motorway companies have signed an agreement with the French government to invest more than 1 billion euros over three years. This exceptional programme involves protecting water resources, protecting local residents from noise, preserving biodiversity, eco-renovating service areas and reducing CO2 emissions.
2015: the Motorway Recovery Plan
Signing of the Motorway Recovery Plan between the French government and the main motorway concessionaires: €3.27 billion invested to benefit the regions. This plan to promote regional development and employment has helped to revive activity in the public works sector, modernise motorway infrastructure to improve user safety and traffic flow, improve connections to better serve the regions and, lastly, bring sections previously managed by the State up to motorway standards.
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Download the map of the French conceded motorway network: PDF; JPEG
Data as for 31/12/2023 (source: 2024 Statistical Bulletin)
