US$650 million road P3 project in North Carolina to be renegotiated

Subscribe to our newsletter and get the latest news and business opportunities in your inbox
US$650 million road P3 project in North Carolina to be renegotiated

This article is part of a daily series of MegaProjects articles. If you want to know more about PPP projects with a considerable size visit our MegaProjects section. You can receive them by email on a daily basis.

The Transportation Secretary of North Carolina, a state in the south-east of the USA, has responded to calls to cancel the I-77 express lanes P3 project by publishing proposals to improve the contract to address opponents' concerns, as outright cancellation is not possible.

The US$650 million project to design, build, finance, operate and maintain new road lanes along around 40km of the Interstate Highway 77 (I-77) going north from Charlotte, the state's most populous city, was awarded to I-77 Mobility Partners in April 2014. The consortium is led by Ferrovial subsidiary Cintra.

It has faced strong opposition since its inception. For example, hundreds of local business leaders developed the I-77 Business Plan to actively fight the implementation of the project. In late 2016, the state governor that signed the contract with I-77 Mobility Partners was defeated in an election by another candidate promising to cancel the contract. Since Governor Cooper took office in January 2017, the state government has faced great pressure to terminate the P3.

The main point of opposition is that the new lanes will be tolled. The estimated US$20 round-trip in peak hours is perceived as too expensive and, as such, will arguably fail to reduce congestion as users will not use the lanes to avoid the charge.

However, cancellation is now off the table, as constraints from state laws and stipulations in the contract prevent North Carolina Department for Transportation (NCDOT) from immediately buying out the contract.​

Under the Strategic Transportation Investments (STI) state law, to receive funding, a transportation project must score above a certain threshold under an objective, data-driven analysis. Projected scoring of the option to immediately buy the contract came in too low to be eligible for funding right away.  ​

NCDOT has vowed to work to address opponents' concerns through improving the P3 contract. The Secretary is aiming to negotiate toll limits to cap the maximum amount that can be charged and frequent user discounts, as well as to expand the non-tolled capacity of the road corridor. One of the proposals for the latter objective is to convert one toll lane to a general-purpose lane for a portion of the corridor.

Cintra has not yet commented on the Transportation Secretary's announcement, though negotiations between the two parties are reportedly soon to commence. For now, construction of the lanes is not affected, with the project on schedule to enter the operations phase next year.

Meanwhile, efforts to bring about cancellation continue, with two Town Boards approving resolutions this week to ask the state legislature to exempt the project from the STI process, which was designed to prioritize new road projects and improvements and therefore is perceived as inadequate to assess the cancellation of a contract.

Share this news

Join us

In order to get full access to News section, you must have a full subscription. You can check all the benefits of becoming a member and purchase a subscription on our membership page.