Case Studies: Ionia Odos Motorway

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Project Overview
Figure 1: Overview of the Ionia Odos Motorway Concession Project
The Ionia Odos Motorway Concession, Greece
Project Type: Both
Contract duration: 30 Years (including Design & Construction)
Budget: EUR1190 M (This budget (nominal prices) includes Design & Construction, Financing Costs and Construction period operating expenses.)
Project Time Line
Studies initiation: prior to 1998
Call for Tender: 2001
Contract Approved: 19 Dec 2006
Financial Close: 19 Dec 2007
Contract ratification: 16 Apr 2007 (Law 3555/2007)
Works halt/ commencement of contract renegotiations: Spring 2010
Announcement of agreement on basic renegotiation terms: 12 Apr 2013
Revised contract ratification: 11 Dec 2013 (Law 4219/2013)


“Ionia Odos” is a toll motorway concession project of approximately 196 kilometres in length, located in Western Greece. The project also includes 183 km of brownfield section already constructed by the Greek state under a traditional public works procurement scheme; these sections are tolled and the revenues are used to fund the construction of the new alignment.

The project’s construction is funded by debt and equity capital, state and EU funds, as well as tolls received during the construction period.

The new motorway is designed to allow journey speed of 120 kph and its typical cross section consists of a dual carriageway of two lanes and an emergency lane, divided by a New Jersey barrier. The project includes over 42 interchanges and over 11 km of tunnels.

The project includes the following main parts: 1) Antirrio – Ioannina (163km): New motorway section 2) Agrinio bypass (33km): This is a motorway section that was built by the state. No tolls are received on this section throughout the concession period. 3) PATHE section Athens-Skarfeia (172.5km) and PATHE connecting branch Schimatari–Chalkida (11km): These sections, originally built by the Greek state, are upgraded / maintained by the SPV.

The 196 km of Ionia Odos motorway include among others: - 24 bridges of single carriageway of an approximate length of 7.0 km, - 4 tunnels of single carriageway of an approximate length of 11.2 km - Over 77 underpasses of an approximate length of 2.5 km and - 24 overpasses of a total length of 1.4 km and - 392 culverts of various types and cross sections of a total length of over 17.0 km.

The Contracting Authority (Public Party)

Ionia Odos is a project that was planned and approved by the Ministry of Environment, Physical Planning and Public Works, as part of a ‘bundle’ of five motorway concession projects – parts of the EU TEN-T periphery network - and partially financed by EU funds. These projects were titled ‘Axes of development’, as they will complete the entire road transport motorway network of the country and, were, thus, expected to have a great impact on growth.

The motorway concession agreements for these projects became laws of Greece, after ratification by the Greek Parliament. Hence, any amendment or alteration of the concession agreement for this project has to be ratified again by the Greek Parliament and by the EU.

The central government was directly involved in all stages of the project’s development. The lack of proper road infrastructure along Western Greece created the need and drive to tender this project on a national level.

The project was originally conceived and tendered (phase A: pre-qualification) in 2001. However, phase B of the project (final tender) was completed in late 2006, 5 years after the completion of the pre-qualification phase. Out of the four consortia that were pre-qualified in the final phase of the tender, only two submitted offers for the project. Eventually, the Concession Contract between the Greek Government and Nea Odos S.A. was ratified by the Greek Parliament via the Law No 3555/2007.

The Concessionaire (Private Party)

Nea Odos S.A. is the concession company (SPV) that has undertaken the study, design, construction, operation, exploitation and maintenance of “Ionia Odos” motorway concession project. Nea Odos is a joint venture of GEK TERNA, Ferrovial and ACS Group, which combine international know-how, experience and expertise along with comprehensive knowledge of the Greek reality. The Shareholder Structure at the time of award was as follows:

  • Ferrovial: 33.34%
  • ACS: 33.33%
  • GEK-TERNA: 33.33%

Both Ferrovial and ACS are major international players in the construction/ concession market, while GEK-TERNA is a major infrastructure group based in Greece. The project Consortium is one of the four that were qualified during the pre-qualification phase of the project in 2001 and was the highest bidder during the final stage of the tender in 2006.

The Concession SPV and Construction Joint Venture (CJV: “Euroionia”) are both owned by the respective Sponsors. The CJV is composed by the construction subsidiaries of the shareholders on a similar percentage structure. The Lenders include a syndicate of international and Greek banks. Due to the Greek and Eurozone financial crisis, the projects have seen a steep decrease in motorway traffic and, as a result, the Lenders imposed a draw stop and construction ceased in 2010. All stakeholders including the Greek State, the Shareholders and the Lenders have since then entered renegotiation discussions in order to restructure the project’s financing scheme and restart construction works. As of 12 April 2013, the government and the SPV have reached an agreement on basic renegotiated terms. These terms include an increased government participation in the project's funding and the payment of approximately €90.5 mil in claims to the CJV.

On 28.11.2013 following the signing of the amendment for the agreement on the Concession, GEK Terna assumed the obligation to cover the required share capital increases and the financing of the secondary loans to the Concession Companies of the project Ionia Odos, establishing by such way itself as the head of the aforementioned companies, as the companies Dragados S.A. and Ferrovial Agroman S.A have ceded the remaining construction part that corresponded to them for execution stemming from the construction projects of Ionia Odos to the subsidiary of the Group Terna.

The project’s financing structure in the original contract is as follows:

  • Shareholders’ Equity: €192 mil
  • Debt Capital: €110 mil
  • Greek State/EU funds: €330 mil
  • Tolls received during construction: €560 mil

Total Project Cost: €1,192 mil

After the contract amendment, the below amounts are modified:

  • Greek State/EU funds: €509 mil

Finally, it should be noted that all Shareholders are primarily active in business development in the construction/concession sector. However, since traffic revenues are heavily dependent on country macroeconomic factors (e.g. GDP), the Private Sector is mainly charged with maintaining a good quality of service and a well maintained motorway; thus, the Private Sector should be mainly considered as a business servicer.


The motorway users include both freight traffic and passenger traffic. Both leisure and commercial travellers use the motorway to travel around Greece, commute to the industrial areas where they work, and/or provide logistics services.

The significant delays due to the project suspension and contract renegotiations, as well as the new toll charges during the economic crisis period, have lowered the perceived success of the project and the public acceptance rate. In particular, the users of the brownfield (PATHE motorway) section have seen an increase in the tolls paid for the motorway length since the commencement of the concession. As a result, there were significant reactions to the concession, with a considerable portion of the motorists even refusing to pay tolls and raising the barriers at toll stations in the brownfield section during the first years of the concession. This movement has deflated as a result of the government taking legal action against violators in the later years (after 2012).

Key Purpose for PPP Model Selection

The PPP model was selected mainly due to restrictions in increasing the country’s sovereign debt levels, as well as the willingness to transfer financing and traffic risks to the private sector via a typical concession scheme under the DFBO structure. The project is returned to the Greek state upon expiration of the concession period.

Completing the project on time and achieving an increased quality of construction and service were also key factors for the selection of the PPP model, rather than a traditional procurement scheme.

Project Timing

The need to complete the project was high at the time of initial tendering, mainly due to the lack of proper roadway infrastructure to connect Western Greece to the rest of the country. Macroeconomic figures at the time (e.g. debt ceiling and GDP forecasts) also justified the project’s implementation, as the highest bidder offered to return to the state an average of 85% of the toll revenues received over the operational period via annual payments.

As mentioned above, Greece’s sovereign debt crisis has severely affected the project execution, decreasing the traffic revenues that were necessary to fund its construction. The Lenders imposing a draw stop and the project’s construction stopping in early 2010, were followed by the SPV and Greek State entering renegotiation talks at the time and announcing an agreement on key terms in April 2013. These include, inter alia, increased state participation in the construction financing in order to partially cover the funding gap. The annual payments are also expected to be recycled into the project in order to cover operational expenses, debt and shareholder repayment.

Project Locality and Market Geography

The motorway is physically integrated into the transport network of Greece, via its existing section of the Patras-Athens-Thessaloniki motorway and its connections to Patra port (through the Rio-Antirrion bridge) and Igoumenitsa port (through the Egnatia Odos motorway link between Ioannina and Igoumenitsa).

Hence, the Ionia Odos motorway is not only considered an interurban and regional project, but it also serves interregional and international freight and passenger traffic.

Procurement & Contractual Structure


A two-phase process was applied for the project’s tendering: a pre-qualification (announced and tendered in 2001) and a final bid phase (tendered in 2005). Seven (7) groups expressed interest during the first phase and two (2) out of the four (4) which prequalified finally submitted bids for the second phase. The project’s concession agreement was signed in late 2006 between the highest bidder (consortium composed by GEK Terna, ACS and FERROVIAL) and the Greek State.

Contract Structure

The contract follows a typical concession structure via DFBO. The project is partially financed (€330M) by Greek State and EU Structural and Cohesion funds of the 2007-2013 programming period. Shareholders and Lenders also participate in the construction funding via €192M of equity and €110M of debt, to be repaid during the operation period.

The project also includes a brownfield section to be upgraded and operated during the construction period. Tolls received during this time are to be used solely for the construction funding. Toll rates are specified in the contract (fixed), and gradually reach their limit (0.04 €/km in real 2003 prices) via the achievement of construction milestones. Due to high volumes of expected traffic, the contract included payments to the State at a rate of 85% (a critical part of the tender’s award formula) of toll revenues received over the operational period.

Risk Allocation

Risk allocation also follows DFBO standards: traffic, financial, commercial, construction and operation/maintenance risks are transferred to the private party, while the State maintains the ownership of legal/regulatory risks. The severe impact of the Greek sovereign debt crisis on traffic volumes has affected the traffic risks as perceived by the private sector, and had a decisive role on the final renegotiated contract structure, mainly through the amendment of the toll revenue sharing mechanism during the operational period.

Initial forecasts made prior to the project’s implementation indicated an annual GDP growth rate of 3.8% and a motorization growth rate of 0.74% for Greece; these estimates assumed an annual traffic volume growth of 14.4% for Greece (Source: TEN-STAC Scenarios, Traffic Forecasts and Analysis of Corridors on the Trans-European Transport Network - 2003).

Land Acquisition risk was also a major point of argument during renegotiation, as land acquisition has caused major delays in the project’s progress since start of works. This is mainly attributed to unrealistic expectations by the State for the time needed to acquire the required land. Delays in land acquisition, as well as archaeological findings and environmental claims, have been a main source of claims against the State in the project so far. It needs to be noted that environmental claims have also caused works to stop in key project areas.

Risk is allocated as depicted in figure 2.


Figure 2 Risk allocation


As the Independent Engineer is mainly responsible for evaluating construction performance, in conjunction with the Awarding Authority, there are no Key Performance Indicators (KPIs) during either the construction or the operational period. Performance during the latter is monitored by the Awarding Authority, which is responsible for evaluating operational performance following the construction period.

However, the financing agreements, considered as annexes to the concession agreement, include several key metrics that are used to evaluate the viability of debt repayment, such as the debt service coverage ratio (DSCR) and the loan life coverage ratio (LLCR). It needs to be noted that decreased levels in these metrics can become grounds for project default.


  • N. Nikolaidis, A. Roumboutsos , 2013, Ionia Odos Motorway In Roumboutsos, A., Farrell, S., Liyanage, C. L. and Macário, R, COST Action TU1001 Public Private Partnerships in Transport: Trends & Theory P3T3, 2013 Discussion Papers Part II Case Studies, ΙSBN 978-88-97781-61-5, COST Office, Brussels available at
  • Roadway fatalities: TEN-STAC Scenarios (2003), Traffic Forecasts and Analysis of Corridors on the Trans-European Transport Network
  • The Ionia Odos Contract, Greek Law 3555/2007 of 19 Dec 2007 of the Official Gazette.