Interview with Atlantia CEO Giovanni Castellucci
So you did it! Congratulations. Can you tell us how the first few months of the Valico bypass route is going? What is the feedback from truckers, who must have notable gains in terms of time and petrol costs? And what about passenger vehicles – how many of them prefer the new route and how many prefer the older one? Are there any surprises in the way the project’s completion is being absorbed by Italians?
It is simultaneously a relief and a great excitement to have done it. The Valico Bypass route has been strongly embraced by the public. The numbers show that. In fact, our data shows that more than 40,000 vehicles chose the new bypass route every day in March, while fewer than 10,000 chose the old route on most days. So well above 80 percent are using the new route. It is faster after all, and they save on gas!
What was the hardest part of the Valico project on a technical level? And on a managerial level?
The hardest part for all of us has been the long wait, but that had little to do with Atlantia. The hardest part was probably the Base Tunnel, due to the extraordinarily challenging geology. It’s almost nine kilometres long and is the part that actually crosses the regional borders between Tuscany and Emilia Romagna. We had up to 700 people a day working on it during the peak excavation period. Managerially the challenge was to keep so many components moving towards completion. Manufacturers have their just-in-time supply chains, but engineering projects can be more complex due to the need to sequence phases and interventions.
The Appenines, especially between Bologna and Florence, are well known as a very complex geological area. Apart from having to build no fewer than 41 tunnels in 59 kilometers, what were some of the peculiarities on this level? Did landslides affect the execution of the project? What about methane and other gases?
The area is a morphological mosaic. The earth is not solid rock, as it is under the Alps, and that is actually easier to excavate. There was a lot of firedamp, which can be managed but takes extreme care and preparation. Landslides are more of an external problem; a lot of the work we did was focused on shoring up delicate and steep terrain with stabilizing enforced vegetation.
Obviously a part of the Valico story is how long it took to obtain definitive approval for the project. Are there lessons to be learned from looking back at that process?
It’s not my job to legislate, but I hope those who have that responsibility reflect and learn. Italy had a reputation of never getting things done, which is actually rather odd given that Italian engineers were once famous for heroic bridges, tunnels and roads. Once we obtained all the authorizations, we actually completed the Valico Bypass pretty quickly by any international comparison. This should be an incentive for those in charge.
The additional costs incurred along the way in building the Valico bypass will be, in your words, “entirely shouldered” by Atlantia. Does this mean that you will have to recover the costs from tariffs across the entire Italian toll-road traffic rather than through higher tolls on this particular section?
The short answer is no. The Concession Agreement signed in 1997 with the Italian State provided for the extension of the concession life of 20 years in order to finance the construction of the Valico Bypass with no additional tariff increases for the users. Actually such extension in 1997 assumed the works to cost €2.5bn (based on a parametric “educated guess”) while we ended up with a final cost of €4.1bn because of all the delays and change in planning we already commented. A 60% increase vs planned guess in 1997 is a huge success.
In a small but obviously necessarily irony, the Valico bypass had to be closed briefly in the middle of the night of January 23, in order to transport the “Martina” boring machine out of the work site. Can you share some thoughts on Martina, which was produced in Germany, won its owner Toto Costruzioni international acclaim, and is the world’s largest machine of its kind?
Martina is quite a work of art! Its maker and contractor deserve kudos and have received them. It is remarkable how much faster excavation goes with this kind of technology. We finished the Sparvo tunnel two years faster as a result of the giant boring machine.
The Valico bypass is full of technology – including technology that will automatically issue speeding tickets to whoever drives faster than 110 kilometers an hour. Will this kind of technology increasingly spread to all parts of Europe’s highway network?
There is no doubt that smart technology and sensors are going to become more extensive, and more effective in transport logistics. There are massive safety and security enhancements available through this. Now, I’ve heard some people complain about the “tutor” system that automatically issues speeding tickets. Of course safety is above all!
The A1 Highway of the Sun is synonymous with Italy’s booming postwar era. The delays in expanding capacity between Florence and Bologna – almost a modern Rubicon at the center of the country – are synonymous with bureaucracy and stagnation. Now that you’ve cut the ribbon, is Italy poised for stronger economic growth? How is this “the work of a generation” as you phrased it at the opening ceremony with Prime Minister Matteo Renzi? How does the Valico project boost growth prospects, both materially and perhaps intangibly?
On this front the Valico project has a clear message: Major investments can be done, they can improve peoples lives, and they can be done with private capital. A generation ago people worried that couldn’t be done. So the project incarnates both change and the message that more change is possible.
Do you think that road tolls are really a tax or are they based on price for service? There is quite is a philosophical debate about that; what is your view and how is it evolving over time?
Well, for Atlantia, tolls are clearly a price for service. Our tolls are determined by a host of factors with which we have to comply, especially on investments in capacity and safety. So they really are not a tax at all, in our case. That said, transportation networks are public goods, they bring benefits – they lower the prices for goods and create jobs, for example - even to people who don’t directly use them. So a philosophical case could be made that tolls are or should be taxes. But the experience with toll roads for major through fares is in my opinion a clear lesson that making them a service is in the best interest of all.