Road Infrastructure ppps in Germany: Why Did the f-modell Fail

Road Infrastructure PPP In Germany:
Why Did The F model And The A model Fail?


Andreas Knorr, Professor of Economics: Economic and Transport Policy,
German University of Administrative Sciences Speyer, Germany ([e-mail])
Alexander Eisenkopf, Professor of Economic & Transport Policy, Zeppelin University Friedrichshafen, Germany ([e-mail])
Abstract
The Warnowquerung – a tunnel project near Rostock which opened for traffic in Sep­tem­ber 2003 – was Germany’s first privately built and operated road infra­struc­tu­re ever and the first one of the F model type. Only 15 months la­ter, in De­­cember 2004, the banks which had con­tributed 68 per cent of the ca­pi­tal, warned that a bank­ruptcy of the tun­nel operating com­pany would be unavoidable within one year due to the unex­pec­­tedly low num­­ber of users. A similar F model-based PPP tunnel project near Lübeck, the Her­­ren­­tun­nel, also spec­­tacularly failed to attract the fore­cast number of users and to reach its financial targets in the process. As for A model PPP, A1 mobil, the operator of one of the four A model pilot projects, has been in serious financial trouble since 2012 with bankruptcy imminent at the time of writing. In contrast to F model PPP, A model PPP are for extensions of existing road infrastructures, e.g. additional lanes on motorways. In this paper, we will identify the causes behind the commer­cial failure of both projects.

1.Introduction

Road infrastructure PPP do not have a long tradition in Germany. There are two alternative variants. The A model is used to increase the ca­pa­city of existing, but congested motorways e.g. by adding an extra lane. (A = Ausbau which means extension in English); in its original design, it was only applied to four pilot projects which went online by 2009, while a modified version – the V model (V = Verfügbarkeit which means availability in English) – was introduced afterwards for another PPP batch of up to twelve project. However, A1 mobil, the operator of one of the four A model pilot projects, has been in serious financial trouble since 2012 with bankruptcy imminent at the time of writing. The F model was developed to fund road infrastructure to overcome bottlenecks such as brid­ges and tunnels (F = Finanzierung which means funding in English). It was only implemented twice so far, and both projects – a tunnel in Lübeck and another in Rostock – both flopped commercially and as role models for road infrastructure PPP in Germany. In this paper, we aim to identify the un­der­lying causes which led to the unfavourable commercial performance of all F model and at least one A model PPP.