Spain's empty highways lead to bankruptcy

Oct 28, 2012 by By Katell Abiven
A road on the Spanish island of La Gomera. Like the housing bubble, pumped up until it burst in 2008, and its speculation-funded phantom airports, the folly of Spain's road-building boom too is now being laid bare in vast stretches of tarmac.

At the Leganes toll booth outside Madrid, the workers scan the horizon for cars. In Spain's recession, the stream of paying drivers has slowed to a trickle and the toll road is all but bankrupt.

Like the housing bubble, pumped up until it burst in 2008, and its speculation-funded phantom airports, the folly of Spain's road-building boom too is now being laid bare in vast stretches of tarmac.

"Right now we can't meet our debt repayments. We are in the hands of the judge," said Jose Antonio Lopez Casas, director of Accesos de Madrid, the company that manages two major highways around the capital.

The two highways, Radial 3 and Radial 5, opened in 2004 at the height of Spain's construction boom. Now the company owes 660 million euros ($850 million) to the bank, 340 million to the builders and 400 million to residents evicted to build it.

Since the Madrid-Toledo highway entered bankruptcy proceedings in May, the trend has spread, with five other major routes following.

"It's no surprise," says Paco Segura, a transport specialist at the environmental campaign group Ecologists in Action.

"In Spain, just as there was a real estate bubble, there was also a bubble in infrastructure, and one of the areas that got most developed was the motorways," he added.

"We built thousands and thousands of kilometres of motorways on routes that did not have the traffic concentration to justify it."

The craze drove Spain to break records: it became the country in Europe with the most kilometres of motorways and the most commercial international airports, and was second only to China in the world for the length of its high-speed train lines.

But while the state was approving all these projects by private companies, it was also developing a network of toll-free highways, naturally preferred by drivers.

In the first quarter of this year, with Spain in recession, motorway traffic fell 8.2 percent compared to a year earlier, hitting its lowest level since 1998, the transport ministry said.

"Traffic around Madrid has fallen by between 15 and 20 percent in the past five years," Lopez said. "In our case it has fallen by much more," he said of his toll roads.

"The economic situation makes the cost of a toll road much more of a factor in deciding whether to take a route or not, when there is a free alternative of sufficient quality," said Jacobo Diaz, director of the Spanish Road Association.

"The demand has clearly been overestimated. The actual volume of traffic is about a quarter of what was forecast."

Ecologists in Action estimates the motorway between Madrid and the city of Toledo receives 11 percent of the traffic its developers expected.

Around Madrid, meanwhile, "nearly all the motorways which are going bust are not getting 40 percent of the traffic they planned for when they were built," said Segura.

On the Accesos de Madrid roads, "where there were supposed to be 35,000 vehicles a day, there are 10,000," said Lopez, who holds out little hope of state aid amid the wave of public spending cuts in the recession.

"Too much infrastructure was built, no doubt about it. Much of it turned out to be no use," he said.

"It has happened with the motorways, it has happened with the airports," said Lopez. "Sooner or later we will found it is happening with the high-speed trains."

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kochevnik
3 / 5 (2) Oct 28, 2012
Infinite leverage in the USA allowed banksters worldwide to tap into unlimited credit while insuring their loans backed by taxpayers. This is the single largest transfer of wealth from the public to the banksters. Not a single prosecution in the USA instead bought politicians speak about terrorists they themselves created and more austerity for the masses.
freethinking
1 / 5 (7) Oct 28, 2012
Koch, I agree, we should have prosecution for the Trillions of dollars the Obama administration gave to "green companies" that went bankrupt. We should prosecute the Progressives who setup the banking system so that they would give loans to those who could not afford them, knowing that it would crash the system. We should Prosecute Obama for lying about Bengahzi terrorist attack. We should prosecute those in the media who are covering for Obama.

Because of Obama, austerity for the masses is coming to the USA. When the USA becomes bankrupt because of his policies, the poor and the elderly will really suffer.
ryggesogn2
1 / 5 (4) Oct 28, 2012
Socialists blame the banks but they have owned the banks since the creation of the Federal Reserve.
The solution is even worse for the socialists/statists/'progressive'/'liberal'/Marxists, allow free market money and banks.

It's not surprising the s/s/p/l/M are mentally deranged.
VendicarD
5 / 5 (1) Oct 28, 2012
Poor FreeTard.

Like virtually every Conservative he just can't figure out the difference between a billion and a trillion.

"we should have prosecution for the Trillions of dollars the Obama administration gave to "green companies" - FreeTard

Is it any wonder why Borrow and Spend Republicans have spent America into bankruptcy?

Is it any wonder why Republicans destroy everything they get their hands on?

Their incompetence comes from their supreme ignorance.
VendicarD
5 / 5 (1) Oct 28, 2012
Actually, Socialists blame the Bush Administration for it's banking deregulation that precipitated the crash, along with the Randite Ideology of Alan Greenspan who publicly admitted after the crash that his ideology was it's ultimate cause.

"Socialists blame the banks but they have owned the banks since the creation of the Federal Reserve." - RyggTard

Poor RyggTard. Greenspan's Ideological failure is the same Ideological failure that you demonstrate here on a daily basis.

That is why you are the laughing stock of PhysOrg.
JTJ
5 / 5 (1) Oct 28, 2012
Writing from Madrid, I find this article is inaccurate and misguiding. The phrase by an ecologist "We built thousands and thousands of kilometers of motorways on routes that did not have the traffic concentration to justify it." is simply not true. Those highways are connecting the main cities in Spain, were highly needed and have been a major factor in the development of Spain. They were built in a period of 30 years. And they carry most of the country's road traffic. Mortality figures have decreased dramatically thanks to them.

The toll roads referred to in the article are broke. They are only a handful of private highways around Madrid, all under 40 miles long. Most of the highways in Spain are freeways.

High speed trains are doing fine, in economical and quality terms. Spanish companies are building high speed train lines around the world, like Saudi Arabia. A few small airports were built for political reasons with no real demand. That's all.

Sadly, a low quality article.
JBA
5 / 5 (1) Oct 29, 2012
Writing from Madrid, I find this article is inaccurate and misguiding.
High speed trains are doing fine, in economical and quality terms. Spanish companies are building high speed train lines around the world, like Saudi Arabia. A few small airports were built for political reasons with no real demand. That's all.

Sadly, a low quality article.


Writing from Spain as well. I agree that the situation presented on many foreign media tend exaggerate things a hair too much.

Still, I don't think the Spanish high speed train can be put as an example of rational infrastructure investment. We built/are building lines to connect cities with very low demand such as the one to connect Galicia or Oviedo to Madrid. We also could continue talking about hundreds of fancy roundabouts, swimming pools, etc...

Our politicians wasted tons of money and now WE need to pay the bill.