2012 - Disincentivising Overbidding for Toll Road Concessions

This study focuses on the phenomenon of overbidding for toll road concessions. Overbidding refers to bidding beyond an asset’s worth, typically in the transport sector through the submission of over-optimistic projections of traffic and revenue. Overbidding for toll road concessions is jnternationally observed as bidders compete in many countries to win attractive (and potentially lucrative) long-term concession contracts. However, it can lead to project distress and commercial failure, dampening the enthusiasm for subsequent private sector investment. These are outcomes that concession grantors generally wish to avoid.

The emphasis in this report is on international experience and practice, within the toll roads sector and beyond. The aim is to build on lessons learned from elsewhere and to make recommendations to state and federal agencies in Australia on how overbidding for future concessions might be disincentivised.