N7 Limerick Southern Ring Phase II (Limerick Tunnel Scheme)

This project was included in the Government announcement of pilot projects on 1st June 1999. A study undertaken in 1987 identified several routes south and west of Limerick connecting the Dublin Road, N7 to the Ennis Road - N18. Phase I of this scheme proceeding south and west from the N7 and joining the Cork Road N20/21 at Rossbrien was completed in May 2004 through a separate contract. Phase II continues west and north to the N18. The project comprises of approximately 10 km of standard dual carriageway and incorporates a tunnel under the River Shannon.

The PPP contract was awarded to the DirectRoute Consortium (Kellogg Brown & Root Ltd., Strabag AG, John Sisk & Son (Holdings) Ltd., Lagan Holdings Ltd., Roadbridge Ltd. (Mulcair) on 18th August 2006.

Contract Award DateContract Awarded toPPP TypeGovernment Programme Status
August 2006 Direct Route Concession National Development Plan 2000 - 2006 Opened 2010

Please click here for more information on the scheme

Financial Aspects of the Limerick Tunnel Scheme

Concession Company

The DirectRoute consortium comprises Strabag AG, John Sisk & Son (Holdings) Ltd, Lagan Holdings Ltd, Roadbridge Ltd (Mulcair), and two third party equity providers namely Meridiam Infrastructure Finance S.C.A. SICAR and Allied Irish Banks p.l.c.

Duties and obligations of the Concession Company

The Limerick Tunnel PPP Scheme incorporates a fourth crossing of the River Shannon in the environs of Limerick City, involved the construction of approximately 10 km of new dual carriageway, along with associated link roads and side roads. This fourth crossing of the River Shannon involved an immersed tube tunnel, approximately 900m in length, linking the townland of Coonagh, on the northern bank, with the townland of Bunlicky on the southern bank of the Shannon.

The route commences in the townland of Rossbrien, linking the eastern end of the Limerick Tunnel PPP Scheme at the location of the existing Rossbrien Roundabout and proceeds westwards, through the townlands of Rathbane North, Ballinacurra (Weston), Ballinacurra (Hart), Ballykeefe, Bunlicky, Castlemungret, Coonagh West, Clonmacken, Coonagh East, Meelick and Cratloemoyle to join with the existing N18 close to Cratloe Castle.

The Scheme includes four grade separated junctions; at Rossbrien joining the Limerick Southern Ring Road Phase I and the Limerick Tunnel PPP Scheme to the N20 Cork/Tralee road; at the Dock Road (N69); at Coonagh West; and at the N18 Ennis Road tie-in. There are two toll plazas and associated utilities located north of the river Shannon and six river crossings, including the tunnel crossing of the River Shannon

DirectRoute is required to carry to undertake the following tasks:

  • Design
    • Complete the full detailed design of all elements; and
    • Carry out necessary structures assessments at various stages throughout the concession period.
  • Build
    • Construct all the works; and
    • Assume responsibility for ground conditions, archaeological monitoring and resolution, utility relocations and, landscaping.
  • Maintain
    • Maintain the road pavement, structures, landscaping, signs, lining, lighting, safety barriers, fencing and all other aspects of the road; and
    • Carry out comprehensive winter maintenance including patrols, precautionary salting and snow clearance.
  • Operate
    • Manage the road and the tunnel in terms of safety, traffic management, information to the road user, oil spillage, accidents; and
    • Operate the tolling system to the required levels of service and upgrade it as necessary to match demand.
  • Re-invest
    • Prior to the handback to the public sector at the end of the concession, upgrade all the facilities as necessary (e.g. road re-surfacing, re-lining) in order to provide the required residual life for the road; and
    • In regard to the road structure, the concessionaire is to hand it back with a further 10 year life before any structural strengthening would be required.
  • Finance
    • Raise finances for the scheme and take the responsibility for all the repayments; and
    • Carry the risk of cost over-runs.

Period of Concession

The contract was signed on the 18th August 2006 and will extend for 35 years from that date. The construction is anticipated to take approximately 4 years and DirectRoute will be responsible for collection of tolls for a period of approximately 31 years.

Cost of the project

The Authority estimates that if it were to undertake itself all the design, construction, maintenance, operation and re-investment tasks that are being required of DirectRoute the cost would be in the order of €660m (excluding land and preliminary design costs) in 2006 values.

The Authority estimates that the cost of land, preliminary studies/design necessary to identify the route, preparation of the statutory documents (Motorway scheme and Environmental Impact Statement), advance ground investigation, initial archaeological testing and resolution, and supervision of its construction will amount to approximately €150m. These costs apply irrespective of the contractual means that could be employed for the delivery of the scheme.

DirectRoute’s financing

DirectRoute is investing substantial funding into this project by means of equity from the companies included in the consortium. The majority of the funding is debt funding and DirectRoute has arranged funding from three sources:

  • HBoS;
  • European Investment Bank – a bank owned by the member states of the European Union which invests in necessary EU infrastructure; and
  • Funds from the consortium members.

A key component of DirectRoute’s financial package for the Project is a debt funding solution involving a monoline wrapped private placement bond underwritten by HBoS (the conduit structure). This has enabled the debt financing to be arranged at a lower cost than traditional debt funding. The funding package also includes a drawdown of equity bridge finance and mezzanine finance.

DirectRoute is the party responsible for the repayment of all these debts and without recourse to the state.

Payments from the Authority to DirectRoute

The Authority’s payments to DirectRoute are fixed and consist of payments of €180m (Nominal) over the period of the construction, released on satisfactory completion of key construction elements, and €60m (2006 values) during the period of operation. (Note: Operational payments are subject to indexation in line with the consumer price index.)

Payments from DirectRoute to the Authority

DirectRoute will pay a share to the Authority, dependent on the level of traffic on the road, of the toll revenues collected. Without divulging full details due to the commercial sensitivity of the exact proposal, the Authority anticipates that this revenue share will be a substantial amount of money that will part repay the subvention payments that the Authority will have made.

Payments from DirectRoute to the State

In addition to the revenue share that it will pay to the Authority, DirectRoute will be obliged to make the following payments:

  • Commercial rates: In accordance with the Valuation Act 2001, DirectRoute will be the occupier of a rateable property due to its operation of the toll facilities. DirectRoute will be required, dependent on the traffic volumes and calculated in accordance with a methodology set out by the Valuation Office, to pay rates to the local authority(s) through whose administrative area the road passes;
  • Corporation Tax; and
  • VAT on non-recoverable receipts.

Summary Overview

For infrastructure with an estimated cost (construction and on-going operations and maintenance) of €660m, excluding land/planning/ preparatory design costs, the State will pay €180m (excluding land/preparatory costs) throughout the 4 year construction period along with a further €60m during the operational period. The State will recoup monies by means of revenue share, rates and taxes.