Privatisation and decentralisation of the French motorways

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The deadline set by the Ministry of the Economy for bids for the state’s share in three motorway operating companies was 22 August 2005. Meanwhile, the Ministry of Transport has been putting the finishing touches - not without opposition - to its initiative to transfer the administration of national highways to local authorities (départements) from 1 January 2006.

Criticism has been growing over the various initiatives relating to the French road network, in the wake of the government’s bidding process for the sale of its interest in three motorway companies. This was further compounded by the announcement, during summer 2005, of its decision to hand over responsibility for the administration of national highways to the départements. The French roads network is to undergo a major shake-up according to the government’s plan, which entails two main areas of action:

• motorways are to be privatised;

• the management of national highways is to be handed over to the départements.

Sale of state’s stake in motorway companies

A total of 18 bids were received by the Minister of the Economy, Finance and Industry, Thierry Breton, by 22 August 2005 - the deadline for receipt of bids for the state’s stake in Autoroutes du Sud de la France (ASF), Autoroutes Paris-Rhin-Rhône (APRR), and Société des autoroutes du Nord et de l'Est de la France (SANEF). An estimated EUR 10 billion revenue is expected to be generated from the sale of these state stakeholdings. Budget minister, Jean-François Copé, has announced that a portion of the money raised will be allocated to the Transportation Infrastructure Funding Agency (Agence de financement des infrastructures de transports, AFIT).

The Ministry of the Economy is expected to announce which of the 18 French and foreign investors has been successful in their bid in the autumn of 2005. Since 1998, all new motorway franchises have had to be awarded through Europe-wide tenders.

In France, some 8,500 kilometres of the approximately 12,000 kilometres of motorway are leased by various companies for terms ranging from 23 to 27 years. The majority of these leases are held by a small number of, mainly French-owned, companies, such as AREVA, BOUYGUES, EIFFAGE, VINCI, together with the original, primarily state-owned, Semi-public Motorway Management Companies (Sociétés d’économie mixte autoroutières, SEMCA).

Prior to the sale of its stake in autumn 2005, the state held:

• a 50.3% stake in Autoroutes du Sud de la France;

• a 70% stake in Autoroutes Paris-Rhin-Rhône;

• a 75% stake in Société des autoroutes du Nord et de l'Est de la France.

According to the Prime Minister, 'the changes to the ownership of these companies should enable them to spearhead genuine venture initiatives'.

The National Assembly Budget Rapporteur, Gilles Carrez, although a member of the governing majority, joined other party members (UMP) in their criticisms of this government initiative.

UDF president, François Bayrou, made it clear that those in the political centre saw the privatisation initiative as 'symptomatic of the excesses of a cash-strapped state, which is selling off the family silver'.

The Socialist Party also condemned the government’s initiative and reiterated the same criticisms it made after the government announced that responsibility for the national highways was to be transferred to Conseils généraux (départements).

Responsibility transferred to départements

This summer, the Minister of Transportation, Dominique Perben, presented a map of what the French highway network will look like in the future. This map showed 18,400 kilometres of national trunk roads, the administration of which is to be transferred to the départements from January 2006. The départements are currently responsible for approximately 360,000 kilometres of regional roads. The upcoming decree, implementing the August 2004 Decentralisation Act (loi de décentralisation), will provide for the transfer of both the 18,400 kilometres of road, between January 2006 and January 2008, and a percentage of département-based public works staff, currently employed by the state.

Of the state’s 130,000 civil servants to be transferred to local authorities under the so-called Local Jurisdiction Decentralisation Act (loi de décentralisation et de responsabilités locales), it is estimated that 33,000 will come from the Ministry of Transport and Public Works.

Local elected officials have taken action fearing that they will be required to bear increasing new costs, as has happened with the transfer of administration of the RMI-RMA system to the départements (FR0401103N). Some politicians even proposed the idea of introducing an experimental toll system on the national highways divested to the départements, as a way of offsetting the new costs. They also criticised the conditions of some roads, which have been hitherto maintained by the state.

In a press conference on 25 July 2005, the Minister pointed out that two-thirds of départements were in favour of this initiative and that the entire EUR 185 million currently earmarked for these roads each year would be transferred to them.

The government eventually agreed to retain responsibility for roads of national importance, as well as those requiring expensive maintenance work relatively soon. Thus, the national roads network for which the state is responsible is to be reduced to 11,600 kilometres, with an additional 8,000 kilometres of tolled motorway.

Meanwhile, local authorities have been putting greater emphasis on the issue of conditions governing the transfer of jurisdiction and responsibilities, particularly in the field of transportation, i.e. to the départements in the area of roads and to the regions in rail transport. The socialist president of the Ile-de-France region, Jean-Paul Huchon, has been demanding - so far unsuccessfully - that the state provide extra financial compensation for transportation in his region (Ile-de-France Transport Authority, Syndicat des transports Ile-de-France, STIF).

Trade union response

Trade union reaction to the government’s initiatives has been evident for a long time, as privatisation of Autoroutes du Sud de la France, ASF, Autoroutes Paris-Rhin-Rhône, APRR and Société des autoroutes du Nord et de l'Est de la France, SANEF, and transfer of the national road network, have been on the agenda for over a year.

Reaction varies between outright condemnation of the privatisation of motorway management companies, and misgivings in relation to the transfer of administration of national roads to départements.

In the opinion of the French Democratic Confederation of Labour (Conféderation française démocratique du travail, CFDT), trade unions 'must use the decentralisation initiative to improve things'. The union indicated that it would 'pay special attention to the future situation of transferred civil servants, especially since the transfer of a third of Ministry of Public Works’ staff would mean a major reorganisation exercise'.

The General Confederation of Labour (Conféderation générale du travail, CGT) pointed out that only a 'minority of local authorities had endorsed the transfers' and opted to 'set up département and region-level committees, to defend public employees’ rights as well as public missions'. It takes the view that the issues surrounding the transfer are far from resolved and intends to demand greater public debate.

On 28 July 2005, the General Confederation of Labour-Force Ouvrière-affiliated Transport and Public Works Union (Fédération de l’équipement et du transport de la Confédération générale du travail, CGT-FO), reminded government representatives that it 'opposed the privatisation of motorway companies on the grounds that a state-run monopoly was being turned into a private one and that the companies had been undervalued'. It condemned the threat posed by the privatisation initiative to company and cross company-level agreements.

Commentary

The sale of the state’s share in motorway management companies, and the transfer of most of the road network to local authorities, has reinforced the feeling that the government is falling down in its responsibilities. Its two-pronged announcement in relation to the French roads network has highlighted the fact that the role once played by the state is being undermined. Moreover, it has prompted questions in relation to the adopted strategies, which have been criticised by both politicians and trade unions.

The additional revenue generated by other privatisations currently underway (FR0509104F) is a significant windfall in the context of a downturn in economic growth. However, questions have been raised about the wisdom of the motorway initiative: what is the point of selling a stake whose overall impact on state debt will be 4.5%, when the intrinsic annual yield from these shares stands at 7.5%?

Future discussions are likely to be difficult, given the anticipated impact on staff and their employment conditions (civil servants’ status or sector-level collective agreement). Talks are also likely to be heated in relation to plans to transfer national railway lines to local authorities. (Benoît Robin, IRES)