Italy Must Seek Big Compensation From Autostrade: Official

(Bloomberg) --

The Italian government should seek a large compensation from the country’s main toll-road operator, the Benetton family’s Autostrade per l’Italia SpA, as it nears a decision on whether to strip its licenses, according to a senior government official.

Salvatore Margiotta, an undersecretary at the Infrastructure Ministry, told Bloomberg in an interview at his Rome office that he expects Prime Minister Giuseppe Conte to settle the issue in January, and in any case before a parliamentary debate on new rules on concessions starts as early as next week.

“It’s evident that the minimum that can be asked is very strong economic compensation, a review of the tolls, a real maintenance plan, maybe with the oversight carried out with the money of Autostrade but not by Autostrade,” said Margiotta, 55, a member of the center-left Democratic Party that’s in the governing coalition. “The other possible solution is revocation, which the government is assessing. That can’t be ruled out.”

He declined to quantify the compensation and added he wants tolls reduced to show that “those who made a mistake must pay.” Autostrade has denied negligence related to the 2018 Genoa bridge disaster that killed 43 people and has stepped up maintenance work for its other infrastructure.

Conte’s coalition is at loggerheads on Autostrade, a unit of the billionaire Benetton family’s Atlantia SpA. Luigi Di Maio, leader of the anti-establishment Five Star Movement, is pushing to revoke its highway concessions, while the Democrats favor a negotiated settlement.

“The position ‘revoke or die,’ like the one ‘don’t revoke at all costs,’ are both wrong,” Margiotta said. He refused to be drawn on which he prefers, saying that his position is the same as the Democrat Party’s stance.

Italy Close to a Decision on Autostrade Concessions, Conte Says

However, to revoke the company’s contract, the government would have to compensate Atlantia. Five Star’s Giancarlo Cancelleri, a deputy infrastructure minister, told Bloomberg last week that a decree approved by the government last month would cut the compensation due to Autostrade to as little as 6 billion euros ($6.7 billion), from more than 20 billion euros, in the event of a revocation.

Atlantia’s shares have dropped 12% in the last six months.

Ex-premier Matteo Renzi of Italy Alive, a junior party in the coalition, has objected to the decree that overhauls rules for revoking contracts, and warned against making international investors flee with “makeshift laws.”

Margiotta echoed concern that the government rewriting the rules could spook investors. “We need to tell national and foreign investors that the game rules established by a contract are valid rules,” he said.

Decision Near

The undersecretary said he expects the lower house to start debating the decree, which has to be approved by parliament within 60 days to become law, next week. He signaled the rules will likely be changed by lawmakers.

“Let’s see how that norm emerges from parliament,” Margiotta said. “I hope the political solution will make the parliamentary process easier, also because part of the coalition said it will not approve that norm, as it did not vote for it in the cabinet.“

Conte told newspaper la Repubblica on Monday that the government is nearing a decision on Autostrade, saying that analysis so far showed that “someone made a mistake and committed grave and unforgivable negligence.”

Autostrade wants to continue talks with the government to avoid losing the concessions, Chief Executive Officer Roberto Tomasi told Corriere della Sera on Jan. 4. The company has presented proposals, including investments and compensation, the CEO said.

To contact the reporters on this story: John Follain in Rome at jfollain2@bloomberg.net;Alessandro Speciale in Rome at aspeciale@bloomberg.net

To contact the editors responsible for this story: Ben Sills at bsills@bloomberg.net, Dan Liefgreen, Marco Bertacche

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