Feelings against the plan to build a brand-new airport at Notre-Dame-des-Landes, near Nantes, run so high that protests there have at times turned into pitched battles. Just last week a court ruled that protestors can be evicted from their tree-top houses and makeshift camps on the planned site. But there is another story besides the environmental issues sparking the protests: the curiously favourable contract granted to Vinci, the giant French construction group which was chosen to run the airport concession.
Vinci works the world over either as a concessionaire which operates infrastructure projects or as a contractor, mainly for public authorities. In France it rakes in cash from managing car parks and toll roads as well as a range of contracts in urban, energy and transport management.
Why the usually publicity-shy company should be so committed to adding the planned Great West Airport to its collection of activities, thus putting itself in the position of becoming public enemy number one for the biggest ecological movement seen in France for some time, may not seem immediately obvious. But the airport sector is a highly profitable business, and one Vinci is keen to get more involved in.
The Notre-Dame-des-Landes project itself is a minor undertaking for a company such as Vinci. Investments there are expected to total 450 million euros over the six years from 2011 to 2017, which comes to 75 million a year. This is a paltry sum for a company that had a turnover of 37 billion euros and net profits of 1.9 billion euros in 2011. The head of the company’s airport division, Nicolas Notebaert, admitted as much last year. "It isn’t in an economic sense something significant for a group like Vinci," he said.
Yet Vinci was very keen to win the bid recalls one of the government officials coordinating the tenders during 2008 and 2009. "It was symbolic right from the start for Notebaert as head of the subsidiary, he said so during the call for tenders," said the official, who asked to remain anonymous. Notebaert joined Vinci in 2002, fresh from the staff of then transport minister Jean-Claude Gayssot (1).
After Nicolas Sarkozy became president in 2007, a plan to fully privatise Aéroports de Paris (ADP), which operates the Paris Orly, Charles de Gaulle/Roissy and Le Bourget airports, was mooted. Vinci, like others, was attracted by ADP’s profitability – 2011 net profits of 348 million euros on a turnover of 2.5 billion euros – and bought 3.3% of ADP, perhaps whetting its appetite.
Then in 2010 it won the concession for what is to be the Great West Airport (1), replacing the existing Nantes-Atlantique airport. "Until then Vinci managed second-tier airports like Grenoble or Chambéry. Winning Nantes gives it a firmer base for its Vinci Airports subsidiary," the government official said.
Moreover, the Notre-Dame-des-Landes project brings Vinci a new string to its bow in the airport sector, that of being a concessionaire. It is practically the first airport concession the group has won, excepting only three airports in Cambodia. At the other French airports it runs (2), Vinci works under a charter known as délégation de service public or DSP, which means a public authority delegates the job of providing a service to a private operator.
The distinction between a DSP contract and a concession is far more than a legalistic technicality. Under DSP rules, public authorities delegate only the right to operate the infrastructure in question. The government or local authorities finance investments and control the way things are managed and pay the private-sector operator a fee.
A concession contract, on the other hand, transfers the burden of financing, construction, maintenance and operation to the concessionaire, which is no longer simply carrying out orders, and is in a sense its own boss. Such investments are usually safe bets for the concessionaire rather than spectacular earners. "You're not sure of making a lot of money but you are sure you won’t lose any," a former concessions manager for Vinci told Mediapart.
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1. Jean-Claude Gayssot, a Communist, was transport secretary in Lionel Jospin's Socialist government which "cohabited" with right-wing President Jacques Chirac from 1997 to 2002. In 2000 the Jospin government revived the Great West Airport project, which had first been mooted in 1963 and shelved after the oil shock of 1973 and farmers' protests around the same time.
2. In France Vinci operates the small provincial airports of Grenoble, Chambéry, Clermont-Ferrand, Quimper, Rennes, Dinard and Pays d’Ancenis.
Half of the cash to build the airport will come from taxpayers
It seems Vinci negotiated a good deal for taking on the controversial Nantes airport project on a number of fronts. Firstly, it obtained a public subsidy of 246 million euros, of which 115.5 million is to come from the local authorities, representing more than half the total planned investment.
This is despite the fact that in theory the concessionaire should bear all the costs. "Usually the concessionaire should not ask for subsidies, nothing would justify that," theformer Vinci concessions manager said. "It does not need them because it receives revenue from operating the airport, from site rental, car parks and so on."
Enlargement : Illustration 2
This is what CéDpa, a group formed by local elected representatives who doubt the value of the airport plan, has been saying for months. "When the giant water utilities came to our communities to win concessions a few years ago, they were the ones who brought the money. In this case it is the opposite," said Françoise Verchère, a representative from the hard-left Parti de Gauche on the Loire-Atlantique General Council, the Nantes-based seat of government at départément level (1).
The general council voted to approve in principle its "participation in financing the operation in the eventuality that after the call for tenders, this became unavoidable" in June 2008, even before the call for tenders was set. No upper limit was placed on this financing, no range was given and no conditions were attached.
A few days later the Nantes City Council also approved "the principle of a community participation in financing the operation". It did impose a condition, however, stipulating that a system of repayment be triggered if airport revenues turned out better than expected.
Verchère tried to speak out against the principle of these subsidies at a meeting of the general council’s executive. "The president of the department replied: 'If we don’t put money in, they won’t come'." Defending these votes, a member of the Pays de la Loire regional executive commented that the candidates needed to know how the financing would be shared between the public and private sectors.
The local authorities, which have since set up a group representing all the bodies involved called a syndicat mixte, will be contributing 75 million euros towards building the airport and about 40 million euros to build an access road. But, in another generous gesture, the subsidy is linked to an index of public works, in other words, to inflation over the period, so the final input from the public purse will be higher than that.
"This is a rather unusual clause," one of the civil aviation authority’s officials coordinating the tenders said, "but we cannot make Vinci take on risks over which it has no control." Recalling that the project was put out to tender at the height of the financial crisis in 2009, he added: "At one point the question was posed as to whether it would be possible to conclude the call for tenders."
And as a final incentive to candidates who tendered for the concession, the date for finalising bank finance for the project was put back to 2014, whereas initially it was a condition for signing the contract in December 2010.
Building group Bouygues pulled out before the end of the tender period and Vinci was chosen over engineering and construction firm SNC Lavalin which itself already runs a number of airports in France. "It was far and away the best value for money," said a member of the tenders commission.
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1. In France there are essentially three levels of local government: the town or city, the département, roughly equivalent to a county, and the region. In the case of the airport planned for Notre-Dame-des-Landes, the authorities involved are the Nantes City Council, the Loire-Atlantique département and the Pays de la Loire region.
'You always inflate the figures'
The local authorities argue that in negotiating a clause that would compensate them in the event that profits from operating the airport are strong, they found a way to offset the advantages granted to Vinci. "The local authorities are the main beneficiaries of this clause, which was bitterly contested and is unique in France," said a member of the regional council’s executive, adding the government had not been in favour of such a clause. Contacted by Mediapart, Dominique Bussereau, former secretary of state for transport, said he had no recollection of the financial discussions for the project.
Enlargement : Illustration 5
But a closer look reveals that the concession contract is not all that favourable for the public bodies that are contributing to the airport project. They can only take a percentage of the difference between actual gross operating profit and the amount predicted in the initial financial model, if actual profit is greater than forecast. This percentage rises from 10% for the first four years of operation to 40% until the 11th year, when it becomes 50%. It tops out at 60% from the 16th year until the concession has run its full 55-year span.
But in the financial model appended to the concession contract, gross operating profit is forecast to double from 25 million euros in 2018 to 50 million in 2028, doubling again to 100 million by 2041 and more than doubling to 228 million euros in 2065. These figures are for the three airports covered by the concession, Notre-Dame-des-Landes, Nantes-Atlantique and Saint-Nazaire-Montoir.
So in practice, profits are unlikely to exceed the financial plan, and so are unlikely to guarantee the local authorities much benefit. According to a former Vinci concessions manager who is not involved in this project but is familiar with how infrastructure projects are put together, estimates for such projects are usually massaged. "You always inflate the figures otherwise infrastructure would not get built," he said.
Local representatives also say the negotiations were far from transparent."Representatives never had access to the discussions," said Verchère, the Loire-Atlantique département councillor. One negotiator recalled that even the executive of the local authorities co-financing the project were not given access to all the candidates' financial analyses, "as the discussions were so fraught".
The financing agreement with the local authorities was quietly signed and sealed during the summer holiday period "with a high level of secrecy", regional daily Ouest-France reported in July 2010.
“Vinci doesn't 'want' to build Notre-Dame-des-Landes. Vinci was chosen by the state to run the current airport Nantes Atlantique and to move it to the site chosen by the state and the local authorities to build the future Great West Airport,” says the group's communication director, evading the precise questions asked by Mediapart.
The group's reply gives an insight into the closed bureaucratic world which has presided over the granting of the airport concession; a convergence of interests between a fast-growing subsidiary of a multinational group and local authorities with projects to build and a budget. Between the two the state has played the role of the fixer, in drawing up its tender appeals according to the abilities of the candidate firms. The result is that maintaining Vinci's interests has ended up taking precedence over public money and the general interest.
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English version: Sue Landau
Editing by Michael Streeter