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Collecting on Toll Roads - International Law Office

International Law Office

Projects & Procurement - Chile

Collecting on Toll Roads

June 13 2000

The privatization of toll roads through concessions is a well-established system for constructing new roads and operating existing infrastructure. However, with the introduction of urban toll roads has come the need for an efficient collection system. Electric toll systems allow motorists to escape having to pay to the toll at the moment they are stopped. Instead, notice of the infraction (not paying the toll) is mailed to the motorist's residence. Unless efficient collection procedures are in place, it is unlikely the infringing motorists will ever pay. This is critical when a concession of a toll road with an electric collection system is expected to be financed with resources from an external source (eg, tolls), without recourse against the sponsors.

The Ministry of Public Works is drafting changes to the existing law affecting project finance. These changes are expected to enable holders of concessions to implement an efficient collection procedure, which should make it easier for banks to provide the necessary financing. Banks determine whether to provide financing based primarily on traffic studies and revenue obtained from this traffic. Revenues stemming from a concession may be the subject of a pledge that entitles the creditor to a security interest with priority rights. The more efficient the collection system, the lower will be the risk of non-payment.

It is expected that the ministry's bill will be sent to Congress in the near future. Among others, participants in the Norte-Sur Toll Road Project - an urban road that will cross the city of Santiago - are eagerly awaiting the proposal. Clearly, availability of financing is crucial in a project of this nature.

For further information on this topic please contact José María Eyzaguirre at Claro y Cia by telephone (+56 2 367 3000) or by fax (+56 2 206 0658) or by e-mail(jmeyzaguirreg@claro.cl).

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