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Advisor(s)
Abstract(s)
The aim of this thesis is to study the existence of excessive returns in the Shadow tolls Road
projects (SCUTs) in Portugal, exploiting the feasibility of renegotiating the contracts providing
excessive rents at the government’s benefice. The study analyses evidence on excessive
returns by using a profitability assessment methodology, consisting in comparing an accurate
profitability measure with a suitable benchmark. For the SCUTs showing evidence on excessive
returns, renegotiations scenarios where these returns are readjusted to the “fair” level are
constructed and simulated. We find that four of the seven SCUTs in Portugal – Interior Norte,
Algarve, Beiras Litoral e Alta and Norte Litoral – show evidence on excessive returns for the
period after the new payment model implementation (in 2010). We further estimate that
renegotiating the State payments for these SCUTs permits savings of €837 Million in the
aggregate SCUTs payments’ present value. We also find that such levels of cut in the State
payments lower the debt service coverage ratio of certain projects below the security level.
Imposing renegotiations where the capacity of the firms to pay the debt is not threaten reduce
the value of savings to €631Million.