Sell-off plans had aroused controversy

The state had been expected to sell part or all of Autoroutes du Sud, Sanef and SAPRR, which together run 6,700km of France's motorway network.

The finance ministry wanted the sales - which could have raised 10bn euros (�7bn; $12.4bn) - to help ease France's budget deficit.

But privatisation was opposed by the transport ministry and by unions.

Transport Minister Gilles de Robien insisted that the state needed the revenue stream provided by the firms' toll-booths; while labour activists were worried about job losses.

Public affairs

According to Prime Minister Jean-Pierre Raffarin, the state will launch capital increases - possibly in the form of bond issues - for Sanef and SAPRR, which are wholly state-owned.

Mr Raffarin is under pressure on privatisation

Autoroutes du Sud (ASF), meanwhile, is in a more complicated position: the state owns only 50.3% of its shares, and the decision not to sell out completely dashes its hopes of a full privatisation next year.

Vinci, a French construction company, owns 18% of ASF, and is keen to take control. ASF has also been approached by foreign investors, and insists that privatisation is its best route to expanding in international markets.

Within the EU, regulations restrict the ability of state-owned firms to make cross-border acquisitions.

Money matters

The decision could be seen as a failure of the Raffarin government's promise to accelerate privatisation, something that has proved problematic in the face of opposition from trade unions.

Mr de Robien says the decision makes fiscal sense

Some analysts insist that France needs to sell state assets quickly, in order to pay down a budget deficit that has breached an EU-dictated ceiling.

But Mr de Robien says that holding on to the stakes makes fiscal sense.

Although a quick sale could raise 10bn euros now, he calculates that toll revenues will be worth up to 39bn euros over the next 30 years.

A strong, long-term revenue stream is vital to fund projected investments in infrastructure, he says.