Citigroup-Albertis wins right to lease Pennsylvania Turnpike

A group led by Citigroup and Spanish toll road operator Abertis Infraestructuras SA won the right Monday to lease the Pennsylvania Turnpike, with a bid of about $12.8 billion.

Gov. Ed Rendell has been advocating leasing the turnpike as a means of funding mass transit and much-needed bridge and road repairs in the state.

Rendell has touted the lease as an alternative to Act 44, legislation he signed 10 months ago that includes converting Interstate 80 into a toll road. The federal government has not approved the introduction of that toll, which has garnered strong opposition.

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The lease would run for 75 years, and the $12.8 billion bid is for the life of the agreement.

"Seems like a slam dunk," Rendell said of the lease agreement.

The Legislature must approve the deal, and Rendell said Citigroup and Abertis would start meeting with legislators to discuss their plans. The bid will officially remain in place until June 20, but Rendell said he has "no doubt" it will be extended as the Legislature considers it.

Rendell said if the lease is approved, it would give the commonwealth 13 percent more funding than Act 44 and cost Pennsylvanians 30 percent less, because it would not include the I-80 tolling.

The other final bidder was a group led by Goldman Sachs Group and Australian toll-road operator Transurban Group, which bid $12.1 billion, Rendell said.

The third bidder was led by Australia's Macquarie Infrastructure Group and Spain's Cintra Concesiones de Infraestructura de Transporte SA, which offered $8.1 billion. Because that bid was not within 10 percent of the other offers, Macquarie and Cintra did not participate in the final bid, Rendell said.

The governor first proposed leasing the turnpike about a year ago as an alternative to tolling I-80. A study done by Morgan Stanley estimated that a 75-year lease agreement could bring between $12 billion and $18 billion to Pennsylvania.

Rendell said "market conditions" and the toll setup -- which caps increases at 3 percent annually -- kept the bids at the low end.

Opponents of the turnpike lease plan often cited the likelihood of a foreign company operating the 500-mile roadway. Rendell refuted that notion.

"There's no more American institution than Citigroup," he said. "And Abertis already operates and manages several (projects) in the U.S."

The Pennsylvania Turnpike Commission could not immediately be reached for comment, but last week spokesman Bill Capone lsaid, "We've known for some time about this process ... and that they would eventually disclose a bid. It will be a matter for the Pennsylvania Legislature to take under advisement."