Macron Balks at Price-Tag for Paris's Grand Transport Plan

(Bloomberg) -- A massive extension of the Paris metro system that would see miles of tunnels dug around the French capital is becoming one of President Emmanuel Macron’s biggest headaches.

The 38.5 billion-euro ($47 billion) infrastructure project, dubbed ‘Grand Paris,’ will involve building 124 miles (200 kilometers) of track and 68 stations but it’s being delayed because the government can’t decide which of the lines should be sacrificed in the first wave as cost projections mount. Each is linked to one of the president’s pet projects -- sites for the 2024 Olympic Games, a research center for artificial intelligence, Chinese investments or the unemployment-ridden suburbs.

Macron, who speaks at the World Economic Forum’s annual meeting in Davos, Switzerland Wednesday, had promised a final decision by December. Prime Minister Edouard Philippe said he will spend more time with local officials before deciding which project to build first. Philippe’s office pledged the government will make a decision next week.

“This great project needs to be seen all the way through,” Philippe said Tuesday on a visit to Champigny-sur-Marne, where one of the proposed new lines will run. “It’s terribly complex and incredibly ambitious.”

The dithering is unusual for the 40-year-old leader who has made a virtue of his ability to execute plans swiftly and keep his promises. Hanging on his decision are not just the millions of commuters and tourists who use the capital’s transport system each year, but also multiple French and foreign companies that have pegged investments to the metro lines.

Google and Facebook

Speaking in October at a university hub where he wants to build a national research center for artificial intelligence, the president pledged the project schedule would be settled by the end of 2017. The first draft of the Grand Paris plan was sketched back in 2009.

Paris’s future transport network was also part of Macron’s pitch to 140 executives including Google Inc. CEO Sundar Pichai and Facebook Inc. COO Sheryl Sandberg when they visited the Palace of Versailles Monday en route to Davos. Paris will be a “global city” with transport system to match, said government spokesman Benjamin Griveaux who’s been touring the world to promote France to foreign investors.

Yet Macron’s team has been talking to local officials for three months now without reaching a decision and the criticism is mounting.

“It’s incomprehensible: they claim to have ambitions to make Paris a global city, and each of their actions shows they plan to scale down the project,” said opposition Senator Arnaud Bazin, who’s constituency is on one of the metro lines. “Make a choice, take decisions, do something. We need to know what’s going to happen with the metro lines.”

Chinese Investors or Paris’s Poor

The government is trying to decide which of the lines should be built first as the rising costs threaten Macron’s pledge to meet European Union budget rules. Investors are waiting on the decision so that they can give a green light to developments in the capital’s suburbs.

To be sure, there’s no good decision. Mothballing Line 17 could hurt the 2024 Olympics and a planned mega-mall partly funded by China’s Dalian Wanda Group Co. Delaying Line 18, which will connect the tech research hub in Saclay with the Orly Airport and central Paris, would damage Macron’s plan to transform France into a “startup nation.” Line 16 runs out to some of the capital’s most deprived suburbs.

Earlier this month, the French national auditor said the price-tag would be twice the initial estimate put forth in 2010 and could weigh on France’s sovereign debt through 2100. The city’s most ambitious building project in more than 150 years is to be funded by long-term debt, Paris-region tax receipts and state subsidies.

The extra costs stem in part from added urgency to complete the extension in time for the 2024 Summer Olympic games in Paris, and insufficient staffing at the public agency overseeing the plan.

©2018 Bloomberg L.P.

Bloomberg
Follow The Latest On The Global Economy On BloombergQuint