January 29, 2020 / 4:30 PM / 20 days ago

UPDATE 1-Atlantia must do more to keep Italian motorway licence -govt source

(Recasts, adds sources and background)

By Giuseppe Fonte

ROME, Jan 29 (Reuters) - Italian infrastructure group Atlantia must do more than offered so far to keep its valuable motorway licence after the 2018 Genoa bridge disaster and faces heavy compensation payouts, a government source said on Wednesday.

Atlantia shares have risen sharply in recent days on hopes of a compromise in a dispute over the licence that accounts for a third of the company’s core earnings. Atlantia shares were up 0.6% at 1605 GMT.

The government has threatened to revoke the licence held by Atlantia’s roads business Autostrade per l’Italia, which operated the Genoa bridge that collapsed two years ago, killing 43 people.

Atlantia has offered to cut its stake in Autostrade to allow outside investors a piece of the lucrative concession to operate 3,000 km of Italian highways but has so far failed to convince the government.

“There will have to be a strong penalty for Autostrade to settle the dispute,” said a government source from the ruling centre-left Democratic Party (PD), asking not to be named because of the sensitivity of the matter.

Sources close to the matter have previously said that Atlantia has offered more than 2 billion euros ($2.2 billion) to resolve the stand-off but the offer was considered insufficient by the ruling parties.

Industry Minister Stefano Patuanelli, a member of the anti-establishment 5-Star Movement that has led calls for the licence to be revoked, on Wednesday said he was certain that Atlantia, controlled by Italy’s Benetton dynasty, would lose the concession.

However, 5-Star’s strength in the coalition government has been severely weakened by its disastrous showing in regional elections at the weekend, where its share of the vote was reduced to single figures.

The Democratic Party is pushing for a tough revision of the mechanism by which motorway tolls are set. In addition, the government is considering forcing Atlantia to give up a section of the toll network.

A decree passed at the end of last year made it easier for the government to cancel the concession. That decree must be ratified by the end of February and analysts have said they will be watching for signals the measure could be softened in a final version approved in parliament.

However, the source said the government is unlikely to give up a measure that allowed it to put pressure on the company. ($1 = 0.9014 euros)

Additional reporting by Angelo Amante Editing by David Goodman

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