EDHECinfra Paper
The cost of capital of motorway concessions in France – A modern approach to toll regulation

The high level of tolls on privatised highways is a sensitive matter in French politics. This research paper on the adequate level of tolls on French roads is prominently featured in a report released by the Senate Investigative Committee on the control and regulation of highway concession contracts and highlights the failure to set tolls using fair benchmarks.

The report of the Senate Inquisitive Commission on the “control, regulation and development of motorway concessions” published today highlights the findings published by the French Transport Regulatory Authority (ART) on July 31, 2020, according to which the overall return (both historic and expected) on the capital of motorway concessions in France is between 6.4% and 7.8%. If we adjust these figures to take into account the cost of debt on the balance sheets of the various road concessionaires in France, the average return on equity is between 27% and 35%, which has not equivalent in Europe. This fine financial performance has a cost: the high level of tolls collected on French highways users.

EDHECinfra Publications
2020 (September)