"It was the best deal since Manhattan was sold for beads." That's what Indiana's Republican governor, Mitch Daniels, told Barron's recently, referring to the privatization of the 157-mile Indiana Toll Road—a deal that netted the state $3.8 billion. Back when Jim Ridgeway and I wrote about this deal, and the larger infrastructure privatization trend that was being pushed along by the Bush administration and Wall Street (Goldman Sachs in particular), there was some question as to whether Hoosiers were getting a good deal. One local economist had estimated that the value of the road, under the terms of the state's 75-year lease agreement with the Spanish construction firm Cintra and Australia-based Macquarie Infrastructure Group, could be as much as $11 billion. Surely he didn't anticiapte a major spike in gas prices and an economic meltdown, factors that took a serious toll on toll revenues.
According to Barron's, which declared the infrastructure privatization boom all but dead, the MIG-Cintra investment is not panning out so well.
Indiana is looking particularly smart because toll-road revenue now seems less dependable than it appeared to be just a few years ago. "Toll-road traffic declines in this recession have been more severe than in any other post-war recession," says Peter Samuel, editor of TollRoadNews, an online transportation Website. He says toll-road traffic is down 6% this year and revenue has been hit by recession-reduced usage by trucks, which often account for 50% or more of tolls.