UPDATE 3-Texas agency again tops Cintra for road project

(Adds Cintra's response, paragraphs 8-9)

By Joan Gralla

NEW YORK, June 28 (Reuters) - Texas on Thursday conditionally approved a public agency to overhaul a busy Dallas-Fort Worth highway instead of Spanish toll-road firm Cintra (CCIT.MC: Quote, Profile, Research, Stock Buzz), a decision that analysts said could stall road privatization plans in other states.

The North Texas Tollway Authority outbid Cintra by $500 million, offering a $2.5 billion upfront payment and $833 million in annual lease payments.

Thursday's decision was made by the state transportation commission, which selected the North Texas Tollway Authority by a vote of four to one, said spokesman Mark Cross.

Cintra in February won the deal to overhaul State Highway 121, but critics said the terms overly favored the developer by including a non-compete clause and a 50-year lease.

Texas lawmakers responded by asking the local highway authority to submit a competing bid.

The legislature also enacted new curbs on such privatizations, which allow developers to lease state highways for long periods in return for the toll revenue.

New Jersey and other states weighing road privatizations have said they are closely following the twists and turns of Texas' saga because they want to avoid a similar backlash.