HUGE GOVERNMENT subsidies have persuaded contractors to take on traffic volume risk for the soon to be built, privately financed, E 867M (£520M) high speed rail link between France and Spain.
The Franco-Spanish TP Ferro consortium said last week that it would repay bank loans for the line from track access charges levied on train operators.
But these charges will only be paid according to the number of trains using the line.
France and Spain will also put £348M of public money into the project.
'We have all the traffic risk, but the project is heavily subsidised, ' Dragados Concesiones director Francisco Fernandez Lafuente told a conference in Madrid last week.
TP Ferro comprises Spanish contractor Dragados Concesiones and French contractor Eiffage.
It is putting up 50% of the private finance, with the rest coming from bank loans.
The project covers construction of a 44km high speed rail line between Perpignan in south west France and Figueras in northern Spain.
Terms of the 50 year concession exclude compensation if traffic levels fall below expectations. But the French and Spanish governments could buy the line from TP Ferro if it runs into financial trouble, said Fernandez Lafuente.
The line will be built on dedicated high speed track and includes an 8.8km twin tube tunnel under the Pyrenees.
It will initially connect the Spanish high speed rail system with conventional French track, although there are longer term plans to connect it to the TGV network north of the Pyrenees.
Designs are currently being finalised, and a TBM has been ordered for the tunnelled section before work starts on site next year.