Macquarie Infrastructure Group has raised the stakes in its battle with the Ontario Government in Canada over the ETR 407 toll-road, launching legal action against the province in a bid to bring the latest skirmish to a halt.
After nine months of frosty relations with the newly elected Liberal Government, the toll-road operator hopes it can end the series of disputes through the courts.
In the latest battle, it has lodged a judicial order pressing the Government not to renew the vehicle permits of tollway users with outstanding accounts.
The 407 also announced over the weekend it had "invoked resolution procedures" to settle a separate dispute over calculations on possible future payments to the Government over traffic congestion.
"If you have 94 years on a concession, you don't want these things to fester," said MIG chief executive Stephen Allen, a Toronto native.
The Government has shown little enthusiasm to
resolve the issues and a fortnight ago threatened to
appeal against
an arbitration ruling which said the
tollway operator had the right to raise tolls
without government approval.
The dispute flared in February when the
407 raised
tolls by 8 per cent without government approval.
MIG owns the
108 kilometre tollway with the Spanish
tollway partner Grupo Ferrovial.
In a statement, 407 said it delivered "a notice
of discriminatory action to the Government for the
province's failure to comply with its legal
obligation to deny [licence] plates".
Enrique Diaz-Rato, chief executive of
ETR 407,
said: "We have tried to resolve this issue amicably
but we are left with no other choice but to take
this action."
The
407 agreed to defer the suspension of licence
plates for defaulters in 2000, citing problems with
"customer service". The
tollway now believes it has
the problems ironed out.
The
407 is electronically monitored and the only
deterrent for drivers who fail to pay their monthly
toll bills is the threat of not having their licence
plates renewed.
With drivers owing up to $C5000 ($5329), the
company said it was owed $C16 million in outstanding
bills.
The
tollway, meanwhile, reported a loss in its
second quarter of $C22.8 million, which included a
depreciation charge of $C25.3 million.
Earnings before interest, tax, depreciation and
amortisation were $C71.6 million for the quarter, up
from $C57.8 million in the previous corresponding
period.
A major positive was the 12 per cent cut in
operating expenses to $C25.4 million and the strong
lift in traffic volumes.
Traffic volumes for the quarter rose 9.3 per cent
over the previous corresponding period, which
included a one-day record of 384,242 vehicles.
JPMorgan analyst David Leitch said the move to
hasten a resolution to the dispute could be related
to the upcoming float of the
Spanish toll-road
operator Cintra Concesiones de Infraestructuras de
Transporte, which is owned by
MIG and Ferrovial.
"The Ontario Government is going to lose but they
still have a few cards," Mr Leitch said, noting the
potential fallout of the dispute on
Cintra's listing
price.
"Their weapon is that they can extend the process
to some extent."
Macquarie Equities analyst Ian Myles said the
latest action taken by the 407 over the non-renewal
of licence plates and tolling issues was a "natural
escalation", given the disputes had been running
since January.
"It's sound logic they are trying to progress the
dispute," he said.