Renzi Party Prepared for Road License Fight in Italy Coalition


(Bloomberg) --

Italy’s coalition government is gearing up for another divisive internal battle, after the party led by former Prime Minister Matteo Renzi said it would fight to scrap new rules that make it easier to revoke highway concessions.

Luigi Marattin, a lawmaker in Renzi’s small Italy Alive party, told Bloomberg News that a decree approved in December to facilitate the termination of a contract with Atlantia SpA’s Autostrade per l’Italia unit, will hurt Italy’s standing with investors.

The rule changes are “a signal of poor credibility when the state gets involved in a license deal with any investor, whether Italian or foreign,” the lawmaker said in an interview on Tuesday. “We want that to be removed,” said Marattin, who’s in charge of economic affairs for Italy Alive.

The new rules, which lapse unless approved by parliament next month, retroactively slash compensation the government would have to pay if concessions are revoked, while preventing licensees from pulling out unilaterally.

For Autostrade, potential compensation for a loss of its concession would be reduced under the new legislation to as little as 6 billion euros ($6.7 billion) from more than 20 billion euros.

While Prime Minister Giuseppe Conte’s coalition is set to decide in the coming days or weeks whether to let Autostrade keep managing more than half of the country’s highways, media reports suggest the premier has already made up his mind.

A cancellation of the contract -- whether immediate or through a more protracted process -- “seems inevitable,” Conte was quoted as saying by daily La Stampa in a story published Wednesday.

The government’s often acrimonious debate over the concession, which started after the deadly 2018 collapse of a bridge in Genoa on a stretch of road managed by Autostrade, has highlighted divisions within the four-way coalition.

Five Star

The move to pull the concession has been spearheaded by the anti-establishment Five Star Movement, the coalition’s biggest force, with the party campaigning hard to revoke the license in a bid to stem a slump in its poll numbers.

The Democrats, the other major party in the alliance, have so far favored a negotiated settlement, but may be leaning toward going along with Five Star, according to media reports, with Renzi’s Italy Alive the sole holdout against the plan.

Asked if he could rule out his party voting against coalition partners on the issue, Marattin, 40, said, “we don’t want to reach that point but we’re convinced of our opinions.”

Ratings agency Standard & Poor’s this week downgraded both Autostrade and Atlantia’s debt, citing persistent uncertainties on the group’s credit profile in the wake of the changes in concession regulations.

Investors in Atlantia have been working on a direct appeal to European authorities, according to two people familiar with the matter.

“This is a matter for the Italian authorities only” the EU’s executive arm said in an email, in response to a question on whether it’s looking into the matter.

Marattin also said his party opposes any precipitous move to strip Autostrade of its concessions.

“If and when Autostrade per l’Italia is judged responsible for the Genoa tragedy, all the resulting measures must be taken, but one second afterward, not before,” Marattin said. “We’re in favor of revocation if and when the judicial authorities establish that there was a serious failure to respect obligations.”

If the issue finishes in the courts, it could be years before a resolution is reached. The Italian legal system is notoriously slow, with lengthy deliberations and repeated opportunities for appeals.

Marattin called for a review of the entire system of highway concessions to ensure more investment in maintenance and lower tolls. An overhaul is needed, rather than simply replacing Autostrade with another company like state-owned operator Anas SpA, he said.

Benetton family holding Edizione SpA has had contacts with state-backed infrastructure fund F2i on a possible alliance, Vice Chairman Gianni Mion told daily Il Messaggero, describing relations between the two sides as cordial for some time.

©2020 Bloomberg L.P.

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