March 9, 2019 / 4:22 PM / 2 months ago

Italian PM sets conditions over rail link to defuse crisis

MILAN (Reuters) - Italy’s prime minister said on Saturday tenders for a high-speed rail link to France could not be finalised without explicit government approval, buying time to defuse a dispute within the ruling coalition over the project.

FILE PHOTO - Italian Prime Minister Giuseppe Conte holds his end-of-year news conference in Rome, Italy, December 28, 2018. REUTERS/Alessandro Bianchi

The multibillion-euro TAV link (Treno Alta Velocita) is backed by Matteo Salvini’s League party but strongly opposed by its coalition partner, 5-Star Movement, which argues that Italy’s share of the funding would be better spent upgrading existing roads and bridges.

Tensions between the two sides had escalated ahead of a Monday deadline for the company overseeing the project, TELT, to launch tenders to carry out works on it, threatening to bring down the government.

But Prime Minister Giuseppe Conte said in a post on Facebook he had asked TELT to halt the finalisation of tenders for the rail link because his government had committed to “totally re-discussing” the project.

Conte published a response from TELT, which said it would call for expressions of interest from potential contractors for the French portion of the rail link on Monday, effectively launching the tender process, in order to avoid losing European Union funding.

However, it said it would not proceed with the definition of contracts without the consent of both the Italian and French governments.

Sources close to the matter said it normally takes six months between the launch of tenders and the next phase, when contract specifications are detailed.

TELT also said in its response that it would insert in the tenders a clause that they could be revoked without penalties for the company or the two states involved.

COST-BENEFIT ANALYSIS

Conte said that Italy would hold discussions with France and the EU in light of a recent cost-benefit analysis commissioned by the Italian government, which found the TAV was a waste of public money.

The TAV is a joint venture between the Italian and French states to link the cities of Turin and Lyon with a 58-km (36-mile) tunnel through the Alps on which work has already begun.

The EU has pledged to fund up to 40 percent of the costs of the TAV, Italy up to 35 percent and France up to 25 percent.

Italy’s transport minister, a 5-Star official, puts the total price tag at more than 20 billion euros ($22.6 billion).

His French counterpart, Elisabeth Borne, said on Friday the European Commission had let it be known it was willing to increase its share to 50 percent, leaving France and Italy to finance 25 percent each.

An EU official has told Reuters the project could lose up to 300 million euros of EU funds if the tenders are not launched by the end of March.

The long-running dispute suddenly escalated late on Thursday and raised the risk of a government collapse, with Deputy Prime Minister Luigi Di Maio — who is leader of the 5-Star Movement — accusing Salvini of acting irresponsibly by insisting the train link should go ahead.

But on Saturday Di Maio said in a Facebook post that the dispute was “being resolved positively”, while Salvini sought to quell fears that the government could fall over the issue:

“Italy needs a government ... There won’t be a crisis,” he said in an interview with news channel Sky TG24.

Reporting by Giuseppe Fonte; Writing by Silvia Aloisi; Editing by Helen Popper

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