Athens Ring Road (Attiki Odos)

The case examines one of the most significant infrastructure projects in southeastern Europe during a time when the legal and financial environment for project financing was in its infancy (early to mid-1990s). Athens needed a ring road to support its bid to host the 2004 Olympic Games. The road was technically—as well as logistically—complex, involving 33 municipalities and construction that involved a major metropolitan area (Athens) populated by more than 3.5 million inhabitants. The case examines the economics of the project, how private-public partnerships (PPPs) are structured, and the broader field of infrastructure finance. Excerpt UVA-F-1576 Dec. 2, 2008 Athens Ring Road (Attiki Odos) The Athens ring road (Attiki Odos) was conceived during the early 1960s, when the first feasibility studies began. Exhibit 1 shows a map of the proposed 65-km highway, crossing Athens from west to northeast. With increasing traffic and pollution in and around the city of Athens over the ensuing decades, the highway was deemed a necessity. More important, it was seen as a critical way to win the bid for the 2004 Olympic Games and accommodate the transportation needs of the athletes and tourists during the games. The project presented two major challenges, the first of which was funding. A combination of high investment cost and Greece's high deficit made the availability of governmental funds a scarce resource, making it difficult to fund the project. Second, the project was very complex given that the construction of the highway, interchanges, and approximately 240 bridges and tunnels would have to be constructed in the urban setting of Athens and would involve numerous stakeholders, including 33 municipalities. Moreover, the road was considered technologically advanced, and its construction posed significant challenges. Finally, it was the first time such a large and complex project would be undertaken in Greece. In 1994, the Greek government appointed Yannis Papadopoulos as an adviser to evaluate several alternatives to source the project. The government wanted to begin construction work in 1996. Initial cost estimates ranged from (euros) EUR1 billion to EUR1.5 billion. The term “infrastructure” usually referred to transportation and telecommunication systems, energy and utilities, as well as a variety of other sectors (e.g., schools, prisons, etc.). Exhibit 2 outlines the main infrastructure categories. Investments in the sector were usually long-term, required large amounts of capital, and involved complex contractual agreements. . . .