Tuesday, 6 March 2012

Belarus to introduce national highway toll system

The Republic of Belarus is rarely in the news. Often referred to as the last dictatorship in Europe, it is closely aligned with Russia, having once been a republic of the USSR and has been led, since independence, by a strongman Alexander Lukashenko. The state and the economy is largely run on a version of the Soviet model, with most industries government owned and political debate in the media subject to constraints. So to read the news that it is looking to impose a user pays toll system across its highway network is curious at least.

The news originally came from a news report about Austrian toll equipment supplier Kapsch, which reported that it had won a contract worth €267m to install and operate tolls on 2,743km of roads using DSRC technology (commonly referred to as “tag and beacon”). It includes operation of the system for 20 years. The system will be fully electronic free flow, which of course can present issues in some countries regarding pursuit of violators. However, Belarus has tight border control so can easily enforce against foreigners, and presumably the rather strong state addresses that issue for its own nationals.   Curiously, opponents of GPS enabled distance tolls sometimes cite the system as "eye in the sky" or "big brother". One would have thought had this been useful, a state like Belarus would have implemented such a system to keep track of its citizens.  The DSRC system being implemented will only record vehicles passing certain points, and only on the national highways.   It will be useless in keeping track of vehicles in cities or rural areas.

The first phase of implementation is to come into effect by 1 July 2013 and will see Kapsch investing in the entire system and recovering the costs from the toll revenue. The toll will apply to all vehicles, except for “Customs Union” cars (which may be a reference to the Customs Union with Russia). It is not clear whether this means private cars of citizens in Belarus and Russia are exempt. If so, it will mean a significant number of vehicles will not be paying tolls.

Belarussian website, Telegraf reports that Belarus has one toll road now - M-1/E30 - Brest (Kozlavichy) - Minsk - Russian border (Radki).

Belarus's sole existing toll road
It is intended that all “first category” roads will become tollways, except the Minsk ring road. This makes sense as the purpose of urban ringways is to take traffic off of urban streets, and tolling will be more likely to divert traffic in that context.

Undoubtedly, this move is driven by Belarus’s geography as a transit point between Russia and the EU (and less so between “mainland” Russia and its enclave of Kaliningrad). Increasing truck and car traffic offers Belarus the chance to make some money from tolls. Nothing in the reports indicates what will be done with the revenue, beyond cost recovery, with no announcements of directing funding into highways or the like. However, the proposed network of tollways is very extensive indeed, so it will be interesting to watch developments.

For Kapsch to do business in Belarus is obviously a feat of effort, which I need not really explain further to those who know how Belarus works.  Having access to revenues for so many years will be worth a lot, but the warning for Kapsch is of course whether Belarus remains the state that it is.  If/when the current President is no longer in power, it may be contracts with the current regime are not worth much, indicating that Kapsch better get the capital value of its investment out of the system sooner rather than later.   With such a fast implementation programme for Kapsch, it will be out to demonstrate that it can do this efficiently and effectively, and hope that it proves to be an entree into the far larger market to the east of Belarus.   I look forward to reading further about proposed pricing, payment systems and enforcement approaches.

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