Atlantia SpA's (ATL.MI) highway arm, thrust into the spotlight by last week's deadly bridge collapse in Genoa, Italy, reduced investment in the toll-road network it manages by two-thirds over the past six years, company statements show.
The news of Autostrade per l'Italia SpA's waning investment comes against a backdrop of a general decrease in spending on Italy's highway system, at a time when the country faces the challenge of adapting its decades-old infrastructure to current traffic volumes.
Delays in making the necessary improvements means it would now be cheaper to rebuild infrastructure from scratch than it would be to repair the existing framework, said Antonio Occhiuzzi, director of the National Research Council's Institute for Construction Technologies.
"The more time passes, the older infrastructure gets. There needs to be a shift from reinforcement [and restructuring] to replacement," he said.
Autostrade manages about half of Italy's roughly 4,000-mile-long highway network, including the bridge that collapsed last week, claiming 43 lives. It is about 88%-owned by Atlantia, a key holding of the Benetton family.
Investment in assets held under concession by Autostrade shrank 67% to 517 million euros ($599 million) from EUR1.58 billion between 2012 and 2017, according to annual reports. The trend continued in the first half of 2018, when investment fell to EUR197 million from EUR232 million in the same period of 2017.
These figures don't include spending in maintenance and safety, an Autostrade spokeswoman said. Those expenses were relatively stable throughout the period, at around EUR300 million for maintenance and EUR120 million for safety each year. In the same timespan, revenues from tolls increased by about EUR200 million to EUR3.59 billion. The company attributed the decline in investment between 2012 and 2016 to the completion of a new highway section.
Autostrade said the day after the collapse that it had invested more than EUR1 billion "per year" in "safety, maintenance and upgrade [of the network]," between 2012 and 2017, and confirmed that the figure was an average of the sums of investment and maintenance in the network.
Following the collapse, the country's National Research Council warned that tens of thousands of bridges have exceeded their natural life spans, and that infrastructural collapses have become "a worrying new normal." In the majority of cases, the maintenance costs for these bridges are greater than those needed for demolition and reconstruction.
The company has scrambled to contain backlash over the tragedy. The government floated last week in a letter the possibility of stripping Atlantia of its licenses, giving it 15 days to defend its conduct. The letter was delivered after government officials condemned declining investment and pushed for heavy fines and resignations. Atlantia said Wednesday it was weighing the potential impact of the letter.
The decrease in investment isn't limited to Autostrade. Figures from the Transportation and Infrastructure Ministry show that between 2009 and 2016, investment spending for the entire national highway system peaked in 2011 at EUR2.2 billion, before falling to EUR1.1 billion in 2016.
Maintenance expenditure stayed relatively stable during the same period, at around EUR680 million a year. The ministry didn't respond to requests for comment on what the figures accounted for specifically, and why spending had fallen so steeply. Ministry figures for 2017 weren't available.
According to the Organisation for Economic Co-operation and Development, new investments in roads fell by about two-thirds in the decade to 2015. Road-maintenance spending decreased by about a third in that period.
"There is an absolute need for a major plan to relaunch public investment in infrastructure," Italian Finance Minister Giovanni Tria said after the Genoa collapse.
Autostrade expressed sympathy for the victims of the collapse but stopped short of apologizing for it, stressing that the company has always carried out its role as highway operator correctly. It approved a EUR500 million fund for disaster alleviation and to rebuild the bridge.
As authorities begin to investigate the causes of the disaster, it remains unclear whether new investment will flow into highway infrastructure.
"The country definitely has the skills and the know-how, but it's the resources that aren't there. The alternative is that bridges will collapse," said Mr. Occhiuzzi.