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UPDATE 2-Eiffage says road tolls row is affecting its entire business
December 17, 2014 / 8:47 AM / 3 years ago

UPDATE 2-Eiffage says road tolls row is affecting its entire business

* Eiffage says motorway operators could agree tariff moderation

* French parliament report recommends scrapping existing contracts

* Report adds to mounting pressure on French motorway operators (Adds details, share price, parliamentary report)

By Dominique Vidalon and Gregory Blachier

PARIS, Dec 17 (Reuters) - A row over road tolls between the French government and motorway operators is causing uncertainty which is jeopardising funding for the rest of the business of Eiffage, the concessions and construction company’s chief executive said on Wednesday.

“Investors are telling us let’s wait to see what the French state will do. We are not sure we can continue with you ... The impact is huge ... all the businesses that require private investment (are concerned),” Pierre Berger said on BFM radio.

Shares in Eiffage were down 0.67 percent by 1107 GMT at 39 euros, having fallen 14 percent since a competition authority report on the toll road market on Sept. 18 alleged that Eiffage and the other motorway operators were making too much money.

The cash-strapped and now deeply unpopular Socialist government has since said it regards the contracts with the operators as too generous and plans to create a new tolls regulator.

Berger’s comments on Wednesday were followed a few hours later by a French parliamentary report which advised the state to scrap existing contracts with operators -- adding to the pressure for government action after a call this week from a minister for a toll freeze and an extra tax on the industry.

The report said it was in the interest of the public to change a system that currently worked “very much to the benefit” of the concession holders.

The operators, whose owners include France’s Vinci , Australia’s Macquarie and Spain’s Abertis , have denied overcharging. They also say their returns are not as high as the competition authority claimed.

Separately, Francisco Reynes, the chief executive of Abertis said, “We have no doubt the French state will respect concession contracts.”

French environment minister Segolene Royal called on Tuesday for a toll freeze next year and raised the prospect of grabbing back 1 billion euros ($1.3 billion) via a tax.

However, the government’s room for manoeuvre is limited as operators are protected by agreements stipulating they must be compensated for any change in contracts, which in some cases do not expire until 2035.

Motorway operators may agree to slowing the pace of toll increases if in exchange the companies get more time in which to recover their investment, Berger said. (Additional reporting by Julien Toyer in Madrid; Editing by Greg Mahlich)

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