Back in May 1996, when the concession agreement for the construction of a modern motorway in Attica Region was being signed, it was certain that the project would solve significant traffic problems, connect the new airport with the City of Athens and the Mesogeia region with the National Roads, and interconnect the two National Motorways, bypassing the urban area of the capital and the long-suffering Kifisos river.

This significant contract, that would substantially change the region’s landscape, provided for a € 437.5 million contribution of the State, of which € 329 million would have to be repaid in the form of a loan from the use of the project, while the rest € 108,5 million had to be converted into reserve capital through amortization in order to address future specific needs. The contract would last a maximum of 23 years from its signing, under the basic condition that the guaranteed return on equity (ROE) of 11,6% would be achieved. If the “magic number” of 11,6% were to be achieved earlier, this would mean the end of the concession and the return of the project to the State.

The success of the Attiki Odos project was a given and this is proven daily by its great use. Today, no driver or resident of Attica could imagine the region without Attiki Odos. The paradox, however, is how a project of such great success has failed to achieve the financial goals set by the contract, or in other words, the guaranteed return on equity we mentioned above; on the contrary, it seems to be considerably lower than the expected one ( 6,23% in December 2018). And yet, a project with greater performance than the original estimation ( with traffic greater than the expected 180,000 routes per day) was extended until 2023 ( with routes per day exceeding 300,000) because the contractor-operator did not earn what had been agreed!

Much has been written to date about the contractor’s alleged concealment of profits, and more precisely about funneling profits through their subsidiaries, using the project’s increased operating and maintenance costs as a medium. Thus, the return on equity index was altered, since the funneled profits were not counted, resulting in the extension of the contract. This was a practice with the aim to artificially keep the “infamous” index in low levels, a practice that one might call “legitimate”, but, sadly, not the only practice of the sort that was used. As mentioned above, Attiki Odos had to return € 329 million to the Greek State in the form of a loan refund. Instead, they first amortized the money, ie they included it in the expenses, essentially converting it into hidden reserves, which is a practice blatantly in breach of contract. The result of this practice was the reduction of profits, in other words, the alteration of the infamous ROE index that we saw above.

Had they correctly implemented the DEEHA-12, not by interpreting it according to their whim, especially in points where it clearly violated the fundamental principles of the International Accounting Standards (IAS) , the ROE index at the end of 2018 would be greater than 30%, compared to the contractual 11,6%. An indicative example is that the incorrect implementation of the DEEHA set 1/1/2007 as the commencement date of the operation and, therefore, the expiration date in 2024, and the amortization of the State’s contribution also in 2007.

Nevertheless, under the correct implementation, without any manipulations, the Greek State should now demand the return of the € 329 million from 2007, along with interest.

In addition, as explicitly stated in the concession agreement in Article 48.9, it was not necessary to exhaust the maximum duration of the contract if the objectives had been achieved earlier. And it turns out that not only had the goals been achieved, but there was also overperformance, almost three times the desired goal. So, instead of returning the project and negotiating, they extended the contract until 2024. The most outrageous thing is that, owing to the supposedly low profitability of the project, the contractor urgently demanded an increase in toll fees based on the concession contract, a demand that of course wasn’t met, as there were strong reactions and public outcry.

Even in the hypothetical scenario that nothing of all the above had happened, and someone liquidated the project in December 2018, they would find that with the correct calculation of the dividends based on the contract, the ROE index would be at 12.46% and therefore exceeding the goal of 11.6% , and so the immediate return of the project to the Greek State would be a given.

Thus, it is clear that the Greek taxpayers have paid – above and beyond the expected – for the construction of the motorway as well as it is clear that the project should have been returned to the Greek State, since all the objectives of the concession agreement have been achieved.

The extension of the contract and the refusal to return the money that the Greek State had contributed constitutes not only a violation of the contractual terms, but also an incorrect implementation of the IAS, resulting in the Greek State losing money.