Italy ministry report says revoking Atlantia concession possible but risky

ROME, (Reuters) - Experts appointed by the Italian transport ministry say it might be best for the government to settle a dispute with infrastructure group Atlantia ATL.MI over its motorway concession, a draft report showed on Tuesday.

FILE PHOTO: 5 Star leader and Italian Deputy Prime Minister Luigi di Maio presents his EU election program in Rome, Italy, May 2, 2019. REUTERS/Yara Nardi/File Photo

Atlantia, which is controlled by the Benetton family, is under siege from leaders of the anti-establishment 5-Star party who blame the company for a bridge collapse that killed 43 people last year and accuse it of neglecting maintenance.

The draft report, obtained by Reuters, acknowledged the ministry had the power to unilaterally revoke Atlantia’s concession, but pointed out that re-negotiating it would present fewer risks for the government.

The company’s shares extended gains up to trade up 3.7% by 1510 GMT after Reuters reported the findings of the draft report.

The concession, held by Atlantia unit Autostrade per l’Italia, is worth a third of the group’s core profits.

Atlantia has always denied any wrongdoing and already agreed to pay 439 million euros (£393 million) to rebuild the Genoa bridge, the remains of which were demolished last week.

The 5-Star Movement’s stance over Atlantia has fuelled tensions with coalition partner, the far-right League, and hindered attempts to involve the group in the rescue of ailing carrier Alitalia.

In an interview with daily la Repubblica on Tuesday, Deputy Prime Minister Luigi Di Maio, head of 5-Star, appeared to strike a more conciliatory tone saying the government was open to finding a solution over the issue.

But in a later comment on Facebook, Di Maio reiterated that all conditions were in place for the government to unilaterally revoke the concession.

In case of revocation, the concession agreement envisages an indemnity equal to the net present value of the concession, which is due to expire in 2038. Some analysts estimated compensation could be around 24 billion euros.

According to the ministry experts, Atlantia is not entitled to any compensation.

But they did not rule out the possibility that a court might recognise Atlantia’s right to an indemnity since the concession had been approved by Parliament in 2008.

Additional Reporting by Valentina Za in Milan; Editing by Keith Weir