Limerick tunnel firm losses rise 63%

The pretax loss at the firm that operates the tolled €810 million Limerick tunnel increased by 63 per cent to €8.3 million last year.

According to accounts just filed with the Companies Registration Office, Direct Route (Limerick) Ltd sustained the €8.3 million pretax loss after revenue fell by 10 per cent from €23.1 million to €20.6 million.

“Revenue is generated by toll charges and payments from the NRA [National Roads Authority]. The largest expense remains the project funding, mainly in the form of loans and bonds,” said the directors’ report. “Traffic guarantee payments have increased in line with the contract and are providing a necessary contribution to project funding.”

Minister for Transport Leo Varadkar recently conceded that more than €30 million could be spent in the next three years compensating toll operators on the Clonee-Kells M3 motorway and the Limerick tunnel. “This amount of money would go a long way in terms of road maintenance and upkeep,” he said at the time.

The NRA has estimated the cost of the “traffic guarantee” between this year and 2015, based on no traffic growth, is €31.96 million for both schemes. If traffic grew by 1 per cent, the figure would be reduced to €30.05 million, and it would fall to €28.13 million if growth was 2 per cent.

The traffic guarantee payment system was put in place due to the high cost of the route and due to it being a challenging project to deliver. At the end of December last, Direct Route (Limerick) owed €251.9 million in loans to group companies.

The Limerick tunnel route – which acts as a bypass to Limerick city – was opened to traffic in July 2010 and motorists pay €1.90 to use it.

The latest accounts show that Direct Route (Limerick) generated revenue of €20.6 million from tolls and operational payments from the NRA.

The figures show that the firm added €5.8 million to its revenue in “other operating income” – a similar figure to the €5.8 million generated in 2011. The decline in revenue resulted in operating profits dropping by 42 per cent from €8.2 million to €4.7 million. However, interest payments totalling €13.8 million resulted in the company recording a pretax loss of €8 million. This followed a pretax loss of €5m in 2011.

The firm’s operating costs of €21.7 million include non-cash depreciation costs of €13.4 million, showing that the firm’s earnings excluding depreciation amounted to €5.4 million.

The figures show that the toll road and tunnel had a book value of €386 million. At the end of the concession period in 2041, the firm will hand back the road to the NRA. Source: The Irish Times