Wednesday, 9 February 2011

Greek toll road boycott threatens future concessions

As has been reported in TollRoadsNews, the economic crisis in Greece has had one unfortunate impact on toll road concessionaires in the country - they have become the target of protests against privately owned toll roads. The protests appear inspired by the relatively strong communist political movement in Greece (it is notable that the third largest political party elected to the Greek Parliament is the Communist Party with just over 8% of the vote in 2009). 

Greece’s economy is particularly hard hit by recession, primarily because Greece has had decades of budget deficits that resulted in the country facing a sovereign debt crisis. The Greek government response has been to significantly cut public spending, which is having a major short term effect on the pay and employment of many people. Some are taking it out on the country’s toll roads by simply refusing to pay.  The situation has been exacerbated by some toll increases.

Three major concessionaires agreed in 2007 to engage in a major construction programme to expand the country’s motorway network, but in recent months more and more motorists are simply refusing to pay, making the road concessionaires engage in debt collection and court action.

The percentage of drivers refusing to pay tolls has jumped from 3 to 14 percent of total users in less than a year, an official with one of the operators told Reuters

Protests started in late 2010, as there were initially pickets at toll booths, followed by protestors taking over toll booths and raising barriers to let motorists pass free according to the Greek Reporter.

This was followed by the Mayor of Stylida, Apostolos Gletsos who used a bulldozer to destroy a barrier to open an access road parallel to the Athens-Lamia national highway at the Pelasgia toll booths. He wanted his residents to be able to use the road free of charge, after a discount card that allowed 1000 residents to use the road for only 0.50 euro expired in January.   The issue being that a relatively short trip within his district requires use of the toll road, a point that a concessionaire should be able to have flexibility over (but should be a commercial decision). 

Some protestors don't simply want to pay less, but want renationalisation of the roads, partly motivated by the steep recent increases in fuel taxes (which motorists reasonably think might go on paying for roads, when it is general revenue used to reduce the budget deficit).  The call to renationalise the roads is based on the idea that the roads were already "paid for" (because the capital is not expended and never needs replenishing), which for most of these roads is simply not true.   It parallels a campaign to boycott paying public transport fares after fares were increased by up to 180% as subsidies were drastically slashed as part of the austerity measures.

One report indicated up to a third of drivers had regularly refused to pay tolls.

The Greek government response has been to play the populist card, calling on concessionaires to half toll prices.  The concessionaires have said in response "extend our concession periods then".  Discussions are continuing, but the government has also keenly been enforcing violators.  The concern being that widespread evasion could spread to taxes - then government starts to worry (although tax evasion has widely been seen as a national sport in Greece).

Sadly, with far left activists, attention is being misdirected to toll road concessionaires which are delivering value to motorists, when the real problem should be with excessive other road taxes, and such taxes not being used on roads.  These activists are ideologically opposed to private enterprise owning and operating roads, so are opposing tolls because of ideology, not economics.  Note they are also boycotting utility charges and hospital fees.   

I sympathise with Greeks who are undergoing massive economic upheaval because governments have been overspending for decades, spending beyond tax revenue and deluding a generation or two that a borrowed lifestyle can be sustained.   However, private investors and concessionaires have helped Greece build significantly improved motorway infrastructure, and should not be chased away by radical leftwing activists who, if they had their way, might have had Greece go the way of its northern neighbours who have tried Marxism and moved on!

Greece needs more new highways in coming years, the last thing it needs is for future concessionaires (and existing financiers and owners) to see the country's toll road sector as being risky for revenue because of people who don't believe in property rights.

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