Case Studies: M-45 Toll Motorway, Spain

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Project Overview
Figure 1: M-45 Toll Motorway, Spain
M-45 Toll Road, Madrid, Spain
Project Type: Both
Contract Duration: 25 Years (extended for additional 4-15 years)
Budget: Original EUR 332M (construction costs)
Final: EUR 500M
Value of the contract (including capital costs and operating & maintenance costs): EUR 750M
Project Time Line
Conception: Late 1990s
Call for tender: 1998
Contract approved: 1998
Contract signed: 1999


The M-45 toll road project is a semi-ring road composed of three separate concession contracts to diversify construction risks. In total, the road length is 37.1 km, going round the south of the Madrid Municipalities between the Barcelona N-II (now A-2) road and the Extremadura N-V (now A-5) national motorways.

The project originated in the late 1990s after the regional autonomous Government, “Comunidad de Madrid”, took the initiative to complete its transportation network. This road is actually part of a regional programme for the Community of Madrid Road Network, which includes other roads with a similar repayment model of shadow tolls.

The project is a high capacity road that accommodates about 70,000 vehicles per day, with peak traffic volumes equivalent to 140,000 vehicles per day. It includes many service and access roads. The infrastructure has high security standards and an innovative design, which allow the user a great level of comfort.

The whole project is composed of three sections, which have been carried out using three similar concession contracts.

T-III: From N-IV to N-V

This 8.3 km section connects the N-IV with N-V. Starting at Km 28 on the M-40 and going between Leganes and Getafe to the south and Villaverde to the north, it finishes before the junction with N- IV. The maximum gradient is 4%, with an expected speed of around 120 km/h.

This stretch of the motorway goes through an area of high density transport infrastructure. There are four junctions: the first at the beginning of the motorway linking it to the M-40; the second junction is with the M-421 and M-425 access roads to Leganes which connected this municipality with the M-40 and now also with the M-45; the third junction is with the N-401 Toledo road; and the fourth is with the road from Getafe to Villaverde (the former M-403). A total of 18 structures have been built, the most significant one being that which passes under the M-40.

T-II: From Axis O’Donnell to N-IV

This stretch goes through the south east of the Community of Madrid. The main stretch is 14.5 km long with a maximum slope of 4%.

This section includes junctions with four roads: the M-203 between Mejorada and Vallecas; National N-III; the M-301 San Martin de la Vega road; and National N-IV. This section has required 26 structures.

T-I: From N-II to O’Donnell Axis

This section, with a total length of 14.7 km, links the N-II with O’Donnell Axis (which continues into the Radial 3), crossing the municipalities of San Fernando de Henares, Rivas-Vaciamadrid, Coslada and Madrid. It contains four junctions with roads to these municipalities. There are 17 different structures, including an 840 metre viaduct over the Jarama river.

The M-45 concessions were awarded in 1998 to three different consortia led by the main Spanish construction groups. Overall, the original construction budget of the three projects sections was EUR 332M, but the final total investment surpassed EUR 500M. Including operating and maintenance costs, and replacement capital expenditures, the final value of the three contracts has surpassed EUR 750M.The M-45 opened to traffic in 2000, a few months earlier than expected.

In general, traffic has steadily increased since operations started, with the exception of the M-50 loop opened during the period 2003-2005, and the arrival of the economic downturn after 2007. However, this negative impact was not as strong as it was for other Spanish roads, as there were no direct tolls for use of the road. Traffic in 2012 fell at all counting points by between 2.6-7.9%, except for Km 25.75 in which there was a traffic drop by 15.8%.

The Contracting Authority (Public Party)

According to its statute of autonomy, the Regional Government of the Comunidad de Madrid has the competence to award administrative concessions. This facility has been used to a great extent in public works to procure infrastructures and public services in areas such as transportation, health, education and other public facilities.

The Public Work Department of the regional Government (Consejería de Obras Públicas, Urbanismo y Transportes currently renamed “Consejeria de Transportes, Infraestructura y Vivienda”, with some minor faculty modifications ) was the responsible authority, the actual grant administrator which carried out all tasks related to the procurement process for the M-45 project, through its specialized road network division Dirección General de Carreteras. This last division is responsible for planning process and the project execution and monitoring, mainly in the areas of construction, planning and concessioning.

The Concessionaire (Private Party)

The whole project has been carried out through three concession contracts. The concessionaires and their main original builder shareholders for the respective sections were the following:

  • T-III: Euroglosa 45 S.A.: shareholders OHL / SACYR;
  • T-II: Trados-45 S.A.: shareholders Cintra / ACS;
  • T-I: Concesiones de Madrid, S.A.: shareholders Dragados / FCC.

After the project was built there were some shareholding modifications and currently the equity structure is shown as follows:

  • T-III: Euroglosa 45 S.A.: OHL Group;
  • T-II: Trados-45 S.A.: Iberpistas (Abertis Group) (50%) / Finavias (AXA Group) (50%);
  • T-I: Concesiones de Madrid, S.A.: Globalvia Infrastructuras, S.A.

The original construction budget for the three projects as EUR 332M but final total investment surpassed EUR 500M due to cost overruns mainly derived from additional works and higher prices for land acquisition. As a consequence, all of the contracts had to be modified to absorb these additional costs, using an economic and financial rebalancing process included in the legal provisions for cost overruns caused by the public administration. In addition, land acquisition costs exceeding a certain limit are compensated by the grantor.

Projected operating and maintenance costs, as well as replacement capital expenditures, were also increased, so the final value of the three contracts surpassed € 750 M.

Contract modifications decided by Madrid Regional Government included:

  • Concession term extension;
  • Changes in toll rates and bands paid by the Government;
  • Increase in maximum annual shadow toll payments by the Government;
  • Direct capital grants.

Financing consisted of three different contracts financed by different bank syndicates, under leveraged project financing at 80-85%. The loan term is 20 years. European Investment Bank also participated in the financing The SPVs as the concessionaires receive senior debt directly from bank syndicates.

Since the beginning traffic has been above forecast, and in one section concession revenues are near the maximum possible.

The average traffic level is around 70,000 vehicles a day, varying by section between 50-100,000 vehicles per day. Peak traffic (140,000 vehicles per day at some points) is about double in the average.

Traffic growth was generally positive from the start date until 2007. There was a drop in traffic when the alternative M-50 loop opened, especially in T-III. The economic downturn has also considerably affected traffic levels, especially for heavy traffic. This impact varies by section: in T-III the drop from maximum traffic volumes is estimated at 15%, in T-II at 20% and in T-I at 10%. However, during the last few months, M-45 traffic levels have been recovering much better than those on other roads, and payments due to the concessionaires are at maximum levels.


In the south east part of the Madrid region the road is used as an alternative motorway to the existing M-40 ring road, mostly to distribute traffic from the north east to different routes in the south and vice versa.

Many users are daily commuters from residential areas and towns in the motorway’s catchment area. But it is also a traffic distributor for the country as a whole as a result of the central geographical location of Madrid, connecting several main corridors.

Payments are regulated by the Government. The road has free access to users and the repayment mechanism is based on shadow tolls, which are paid directly to the concessionaires by the grantor. The contract includes fixed tariffs for different vehicle categories, which are updated annually in accordance with the inflation rate.

Since the beginning, traffic has been above forecast. Concession revenues are at the maximum possible level or near it. Traffic levels in 2012 ranged from 45-95,000 vehicles per day, depending of the counting point, after a slight fall from previous year at all counting points.

An audit carried out by the Regional Government Agency Camara de Cuentas criticises the feasibility study for underestimating the projected traffic, as a result of which the annual payments are at the maximum expected level. This has been politically controversial since some political parties consider the project burdensome for the public sector, by bringing too much benefit to the concessionaires. Since the economic downturn payments have became a big issue for the grantor, resulting in delays in annual payments.

Key Purpose for PPP Model Selection

One of the main reasons for building the road was ambitious plans for real estate development in the area to both sides of the road. However, the road was clearly needed given existing traffic congestion on the alternative M-40 and the economic dynamism of the area.

Public budget restrictions on building the road at that time were evident, so it was decided to defer payments and transfer the traffic risk to the private sector. The shadow toll approach mainly aims to finance the infrastructure. This PPP model was selected by the Regional Government to finance its road building initiative in the area. Moreover, this model has been used in other roads, apart from the M-45 project (M-501, M-511 and others). These projects are built to complete the existing regional road network already designed by the State Government (basically National Motorways, Radiales and M-40 and M-50 ring roads).

Project Timing

The project was conceived in the late 1990s at the same time as other new roads were also projected by the State Government. The idea was to complete a new traffic network in the Madrid Region by widening existing roads or building new ones. The need for the M-45 road was clear , as illustrated by the large traffic volumes that currently use it.

Important dates for the projects may be summarized as follows:

  • 26 February 1998: Open call for public bidding;
  • 14 September 1998: The bidding process was declared unsuccessful.;
  • 15 September 1998: Standards issued for a new competitive but negotiated process.
  • 24 September 1998: Approval of award of concession contracts (most advantageous offer considered by Contracting Authority dated 22 September 1998);
  • 28 October 1998: Publication of resolution granting concessions, dated 01 October 1998;
  • 29 April 1999: Signature of concession contracts;
  • End August 2000: Start of initial operations;
  • April 2002: Start of final operations.

Project Locality and Market Geography

The project is located in the outer urban area of Madrid. It is intended to reduce congestion in the area from the existing N-II motorway corridor in the north-east to the N-V corridor in the south west.

The project focus is to improve traffic distribution around the city centre and also to provide a connection between the east and south-west national corridors, since Madrid is located in the geographic centre of the country. Although the project is located in a Trans European corridor it is primarily a local project to distribute traffic around the city centre.

Procurement & Contractual Structure


The tender was planned as an open call process, following Spanish regulations and tradition for similar types of projects. However, none of the offers fulfilled all of the detailed requirements, and the Regional Government was not able to select a candidate in first instance. In the end it was a two stage procedure, with an open call and a negotiated process, as a consequence of the initial open call process being abandoned.

There were more than five bidding consortia participating in the first open call process, but only one consortium was selected for each of the three concession contracts. This decision was based on construction risk diversification within the main Spanish construction groups who formed the initial three consortia.

Even though the process involved two stages, the whole procedure did not take very long. It took barely 14 months from the initial call to the signing of the contracts, and this was mostly due to some administrative requirements in relation to the final signature and publication, since the final award was agreed only eight months after the initial expression of interest.

The Region’s public works department Consejeria de Obras Publicas, Urbanismo y Transportes published a resolution with an open call bidding process for an administrative concession of the project, including construction, maintenance and public service operations for the three sections of the new M-45.

The bidding process followed the existing legislation in force, mainly Law 8/1972 on toll roads under the concession model, Decree 215/1973 on general standards, and Law 13/1995 on public procurement. In addition, the process considered the requirements for roads included in Ley de la Asamblea de Madrid 3/1991 (7 March 1991), and its modifications in Ley 11/1997.

After negotiations a new Resolution was published in October 1998, granting the concession to the following consortia:

  • T-III, from N-V to N-IV: Construcciones Lain, S.A.; SACYR, S.A; S.G. Obras y Construcciones Obrascon, S.A.; Argentaria, S.A. and B.C.H. S.A.
  • T-II, from Eje O´Donnell to N-IV: Cintra, S.A.; ACS, S.A.
  • T-I, from N-II to Eje O’Donnell: Dragados y Construcciones, S.A.; FCC Construcción, S.A.; NECSO Entrecanales Cubiertas, S.A. and Caja de Madrid.

Contract Structure

Within the Madrid Regional Government, the Public Works Department is responsible on behalf of the public sector. The road division “Direccion General de carreteras” carries out the regulatory requirements of government departments in the bidding process, as well as the monitoring and follow-up of the contracts.

An ex-ante evaluation was carried out by the Public Works Department, using cost benefit methodology. There is no evidence that Value for Money and Public Sector Comparator analyses had been performed, as these are not traditional parts of Spanish project appraisal procedures.

An ex-post evaluation has been done by the Region’s Camara de Cuentas, within a specific audit process for all public payments and grants to the transport sector in the region.

Projects are bid and awarded by the Regional Government following both State and regional regulations, as referred to previously.

The contract is a typical BOT where the Regional Government is the only customer, providing annual payments in lieu of user tolls. This is similar to the shadow toll model included in the British Private Finance Initiative.

The Regional Government decided to make annual grants to cover the costs of the user tolls, and this way allow free public access to the road, while enjoying the benefits of transferring most risks to the private sector.

The M-45 project was the first one in Spain to adopt shadow tolling, but later this model became popular with other Regional Governments and also the State Government, mostly for the maintenance of some existing roads and other brownfield projects.

Termination clauses and tariff policy are included in the contract, and are complemented by general law provisions.

Public sector human resources are required in the construction phase in order to control all of the works and ensure compliance with the original project. All modifications must be accepted and approved by the Highways Department, and have to be duly justified.

Provisions for early termination make the grantor liable for breach of contract under the Public Administration Liability clause. There are no grantor guarantees, and the concessionaire has to provide the usual guarantees for construction and operation of the road.

Risk Allocation

In principle, the original risk allocation transfers the main risks to the private sector, and it is the concessionaire who assumes the design, construction, commercial and operating risks, except when the land expropriation prices exceed an agreed limit. Charges and delays caused by other public administrations (local and regional) are eventually assumed by grantor.

Construction risks are private but design must follow the project already defined by the grantor. However, there are provisions for concession contract modification (mostly duration and annual payments) as a result of economic and financial re-balancing that have minimized the private sector construction risk. Eventually, for diverse reasons many of the construction cost overruns were absorbed by the grantor.

With shadow tolls paid by a single (public sector) client, Commercial risks are assumed to lie with the concessionaire because of variations in actual traffic. There are also tariff bands and maximum annual payments.

Theoretically the regulatory risk is totally public, especially considering the general provision for:

  • public administration liability;
  • economic and financial re-balancing.

In the event of force majeure the public sector assumes the risk.

The original risk allocation in the contract is presented in Figure 2.

Figure 2: Original risk allocation


Initially traffic levels outperformed the forecasts, thereby achieving the concessionaire’s maximum revenues (capped by contract). However after the alternative ring road M-50 opened, traffic decreased to an expected level. Lately, due to the general economic crisis, traffic volumes are below but near to the levels that allow the concessionaire to obtain maximum revenues.

Figure 3: Traffic volumes on the M-45
Source: Traffic Reports CAM 2012-11

Recently, the concessionaires have been facing cash flow difficulties as a consequence of public budget restrictions, but some solutions are expected soon. On the other hand, the grantor has had to assume some cost overrun as a result of deviations in the final price of land.

There are performance indicators included in the contract with regard to:

  • Annual traffic volumes;
  • Tariffs, which are linked to traffic bands expressed in terms of annual vehicle/km;
  • Maximum annual payments by grantors;
  • Indexation of annual payments to inflation rates via a formula.

There are no specific maintenance or environmental KPIs in the contract apart from the basic ones included in general legislation, but some specifications for penalties are provided. Penalties are related mainly to the following aspects of operation and maintenance:

  • Time taken to respond to specified circumstances;
  • Safety (days of delays, achievement of quality standards, response rates);
  • Capacity of the available road (main carriageways, access points, exits, and link roads);
  • Winter operations (availability of equipment and raw materials such as salt, and actions to allow the road to be fully or partially operative.

There is no official post-operating performance evaluation report, apart from the audit report of the Regional Camara de Cuentas, which covers many topics. This report, and some research based on press reports and independent opinions, suggest that:

  • The absence of user tolls ensures usage of the road;
  • Infrastructure usage is quite acceptable, and therefore construction of the road is justified.

However the payments committed by the grantor in accordance with the terms of the contract are consuming almost half of the annual budget for the Transport Department, whilst the cost of the infrastructure is said to have been already re-paid. This suggests a lack of financial planning by the authorities. The situation may be unsustainable and some renegotiation may take place, although the contract does not include provisions for renegotiation in the case of excessive profitability.

In addition, there has been a cost overrun as a result of the higher than expected price of land. This may put additional financial pressure on the public budget.

In conclusion, the construction of the infrastructure has been successful and popular, as can be shown by the level of usage and satisfaction. However, there are complaints about the final cost to the public budget being much higher than the cost of the road construction, and the low level of risk assumed by the private sector. For this reason, some observers question the role of the private sector.

Critical success factors have been:

  • High traffic levels;
  • Proper design in relation to existing needs;
  • Safety;
  • Driving comfort;
  • Free access to the public;
  • Public budget changes;
  • Technology implementation;
  • PPP framework;
  • Micro-economic improvements (regional).


  • Abertis (2013). Cuentas anuales consolidadas.
  • Concesiones de Madrid.
  • Dirección General de carreteras. CAM (2001) Ficha Técnica M-45: Innovación tecnológica y Financiera.
  • Dirección General de carreteras. CAM (2003) M-45 Report.
  • Dirección General de Carreteras. CAM (2011 & 2012). Annual traffic report.
  • Camara de cuentas. CAM (2005). Audit report for current and capital transfers to Transport in Comunidad de Madrid.
  • Official CAM Gazette (1998). Specific administrative procedures for the M-45 road for the tender, modification and granting approval resolution (one for each section and procedure).
  • Spanish Press articles (ABC, 25 September 1998; EL PAIS, 8 August 2005; EXPANSION, 23 March 2009; and other related articles.
  • OHL Concesiones, S.A. (2013). Consolidated financial statements report for 2013.
  • F. J. Villalba-Romero, C. Liyanage, 2014, M-45 Toll Motorway, in A. Roumboutsos, S. Farrell and K. Verhoest, COST Action TU1001 – Public Private Partnerships in Transport: Trends & Theory: 2014 Discussion Series: Country Profiles & Case Studies, ISBN 978-88-6922-009-8