Bloomberg News

Lights Go Out in Spain as Cuts Plunge Highways Into Dark

May 11, 2012

Prime Minister Mariano Rajoy is trying to pare the  country’s deficit by about 27 billion euros ($35 billion), an amount equivalent to almost a third of central government spending last year, to appease European officials and bond investors. Photographer: Mario Proenca/Bloomberg

Prime Minister Mariano Rajoy is trying to pare the country’s deficit by about 27 billion euros ($35 billion), an amount equivalent to almost a third of central government spending last year, to appease European officials and bond investors. Photographer: Mario Proenca/Bloomberg

Cars went barreling along the highway in darkness, ferrying families from Madrid to the beaches of Catalonia during the Easter holiday season, the black stalks of unlit streetlamps flicking past their windows. Truck drivers honked angrily as motorists switched on their full beams to pick out curves in the road, momentarily dazzling oncoming traffic.

Motorists traveling along the main highway linking the Spanish capital to Seville and the rest of the south face similar challenges.

“In some stretches it looks like they’ve been switching off the lights, in others they are missing the bulbs or the cables,” says Pascual Cabello, 32, who runs a fleet of eight trucks. “It’s only going to get worse,” he adds.

The most draconian spending cuts on record are plunging Spain’s cities and highways into darkness as ministries and mayors struggle to pay for basic services, Bloomberg Businessweek reports in its May 14 issue. Prime Minister Mariano Rajoy is trying to pare the country’s deficit by about 27 billion euros ($35 billion), an amount equivalent to almost a third of central government spending last year, to appease European officials and bond investors.

At the same time, Rajoy is battling the fallout from Spain’s second recession since 2009. Unemployment had edged up to 24 percent, pushing up social security payments, damping tax revenue straining the country’s financial system.

Propping up Banks

The government this week said it will use public money to prop up the banks for the first time and ordered lenders to set aside another 30 billion euros to cover the real estate losses buried in their balance sheets. The state will take control of Bankia SA (BKIA), the nation’s fourth-biggest lender, converting 4.5 billion euros of preferred shares into ordinary shares.

Public lighting is one of the more visible casualties of the hard times.

More than half the highways in Spain that have lighting installed have either had it switched off or are inadequately illuminated, according to a report by the Spanish Highways Association, a lobby group backed by construction firms, released last month. A spokeswoman at Spain’s Public Works Ministry, who asked not to be identified by name, said the government had no obligation to light highways, except for tunnels, and that the black outs are part of plan to boost energy efficiency.

Infrastructure Investment

The Spanish government increased annual public investment in transport infrastructure by 104 percent from 2000 to 2010, the second-largest increase among the 11 original members of the euro zone, according to the European Union’s statistical agency. It added 5,200 kilometers (3,200 miles) of highway and built high-speed rail lines to Barcelona, Valencia and Malaga.

“We had lots of aid from EU funds and created a very fast, very short-term growth model without thinking about what would happen when the taps were turned off,” said Jacobo Diaz Pineda, managing director of the highways association. “Now we can’t afford to pay the upkeep of what we’ve built.”

Rajoy’s cuts in public works projects are ravaging the Spanish construction firms like Fomento de Construcciones y Contratas SA that built most of the new infrastructure. FCC, which has lost about 85 percent from its peak five years ago, today reported first quarter profit of 16.6 million euros, down 59 percent from the year earlier period. The company made more than 700 million euros in profit in 2007.

Copper Theft

The report from the highway association estimates that the government needs to invest an additional 5.5 billion euros to bring up roadways up to scratch--outlays that probably will be deferred until the economy stages a comeback.

At the same time, Spain’s authorities are having to fight a surge in thefts of copper power cables that have knocked out lighting in some areas. In April, the Guardia Civil, the equivalent of the U.S. National Guard, conducted raids on 20 scrap metal merchants in Cadiz, a city in the south west of the country.

The crackdown netted 120 tons of mainly copper metal as well as a 200 year-old canon dating from Spain’s War of Independence from France. The 12 persons arrested were part of a gang that during the past two years has been stealing copper cable from the lamp posts lining the Madrid to Seville highway, the Guardia Civil said.

Reduced Visibility

Professional drivers like Cabello, the truck driver from Malaga said that the limited visibility, along with asphalt deterioration because of reduced maintenance budgets, risks reversing improvements in road safety that cut the number of road deaths by 64 percent over the past decade. Traffic accidents killed 107 people in April, 4 percent more than the same month a year ago, and the first increase in 13 months.

“When you go at night with only the lights of your vehicle it’s just not the same as looking 500 meters ahead with street lamps,” said Felix Tijero, 52, who runs a business transporting heavy machinery for construction. “The difference is dramatic.”

To contact the reporter on this story: Ben Sills in Madrid at bsills@bloomberg.net

To contact the editor responsible for this story: Cristina Lindblad at mlindblad1@bloomberg.net


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