Transport Authority advanced company developing new ticketing system up to €14m

BarcelonaT-Mobilitat, the controversial project for top-up transport tickets to replace the current cardboard tickets in public transport, hung by a thread last autumn. After CaixaBank threatened to withdraw from the project, the Metropolitan Transport Authority (ATM) made a move to avoid it from happening and ensure that T-Mobilitat went ahead with the initial configuration, i.e. developed by a consortium (SOC Mobilitat) led by CaixaBank as well as Indra, Fujitsu and Marfina.

The consortium had run out of money, among other things because CaixaBank, tired its non-compliance with payment commitments, withdrew its financing last year. To unblock the situation, the ATM decided to advance part of the company's revenues, "up to a maximum of €14m (excluding VAT)" in 2021, to guarantee "the liquidity" of the concessionaire and ensure that it will complete the task entrusted to it back in 2014. This is stated in the latest legal report, drawn up to justify the administration's motives in the face of a new modification (the fourth, to be precise) of the original contract. The ATM has confirmed to ARA that since the end of December €10.6m have already been paid, excluding VAT,

The transport authority claims that this advance has no impact on project numbers, because this money would have to be paid anyway over the course of the concession contract. Specifically, the money advanced corresponds to "guaranteed management fee income for the last two years" of the concession, which ends in 2033. In other words, the company will start collecting part of the money even before the card is in place or a definitive timetable for its roll-out has been established.

The administration, in fact, admits that this payment, which was not foreseen in the initial contract, "modifies" the agreed remunerations and that SOC Mobilitat will receive "a cash flow that it would not receive according to the contract's initial forecasts".

The ATM argues that the modification is made "in response to the exceptional situation in which we find ourselves" after the pandemic, the multiple delays and Caixabank's threat to withdraw. It says it has acted "in order to preserve the T-Mobilitat project contract, guarantee the ensuing public service and provide liquidity to the contracting company to make the commissioning viable".

The report points out that reaching an agreement with the concessionaire is essential because the system could not withstand the project (which already accumulates six years of delays and cost overruns) being scrapped and a new company starting over from scratch. In fact, according to their calculations, tearing up the contract with the current concessionaire would delay the T-Mobilitat four more years, with the cost overruns that this would imply (for example, the maintenance of the current cardboard tickets costs the administration 6 million euros a year, as this newspaper has also explained).

The implementation problems that T-Mobilitat is having are mainly of a technological nature, according to the report, which states that ATM became "seriously concerned" when it started testing in operators such as Ferrocarrils de la Generalitat or the Barcelona Tramway. The consortium's technology partner, Indra, received complaints from other companies in SOC Mobilitat and, during 2020, this company even announced that it was ceasing to provide its services to the project.

A "neutral" economic impact, according to the ATM

The report takes pains to emphasise up to ten times that the advance payment of up to €14m, which comes out of the transport authority's reserve fund, has "a neutral impact" on the total cost of the project. "The contractor was already guaranteed this remuneration during the operation phase of the T-Mobilitat project and, therefore, it does not represent a major economic impact or remuneration in favour of the latter," it reiterates. "Given the difficulties –the report continues– it only intends to adapt the remuneration system initially foreseen".

Thus, the agreement reached between the concessionaire and ATM in December to move forward with the T-Mobilitat also includes a system for the return of this advanced money: the ATM expects to recover the money in 10 years' time. In 2032 and 2033, the amount paid will be deducted "monthly" from the income that SOC Mobilitat will be receiving as a management fee. However, this refund will depend on the project not suffering any new setbacks and the revenue forecasts being maintained.

In order to reduce the risks, ATM also set some conditions for the concessionaire, such as, for example, that a new economic and financial plan be drawn up (which had to be presented on January 31) and that phases 1 and 2 of the T-Mobilitat be implemented (for which the report does not set a date). If these requirements are not met, the company awarded the contract will have to return the money. The first of the conditions, the financial plan, has not yet been presented. As confirmed by ATM, it has been decided to extend the deadline for submitting this plan until March 31.

Stopping the project would have "disastrous consequences" and would generate "rejection"

In the report's 90 pages, the ATM sets out the reasons why it considers this change of criteria in the remuneration to be indispensable. The transport authority assures that a new delay in the execution of the T-Mobilitat "would have a disastrous impact, not only on the economic resources of the system, but also on users and the operators, due to the numerous negative consequences for the public interest".

ATM gives sufficient details of the economic, social and reputational consequences that a new delay would entail and assures that the public would view with a failure of the project "rejection".