Monday, 5 March 2012

India tolling - bright future, but where's the technology?

The Financial Chronicle in India has a good review of the development of roads in India and future goals, with tolling playing a significant part of that.

Some of the key points are:

- National Highway Development Programme target is for 20km of new roads to be built every day;

-"The Golden Quadrilateral that connected the four metros — Mumbai, New Delhi, Kolkata and Chennai — is 99.81 per cent complete, with 5,835 km out of 5,846 km already laid. As on January 31, in the North-South-East-West (NSEW) corridor, 5,945 km of the total 7,300 km is complete while the rest is under implementation and around 420 km as balance is yet to come up for awarding of contracts."

- Target is over US$2 billion in toll revenue per annum;

- India has the world's second largest road network of over 4.24 million km;

- Land issues for concessions are one set of problems that cost delays in concessionaires of over 1-1.5 years;

- Bids for construction are becoming more competitively priced, but some small participants lack capability or financial capacity to finish some of their contracts, slowing progress;

-  Some aggressive bids for concessions are aiming to win by having overly optimistic traffic forecasts;

-  The National Highway Authority of India tries always to award to the lowest bidder, creating perverse incentives for bidders to compromise quality and forecasting;

-  The big growth sector is with light commercial vehicles, which are growing faster in numbers than any other vehicle group, followed by HGVs.  Together all commercial vehicles generate 70% of revenue on Indian toll roads.


There are around 300 toll booths across India. However, almost all of these are manual, meaning users handle cash and it is slow.

The Financial Chronicle in India reports that there is no system nationwide to calculate toll revenue collected. That means there is no idea whether some toll booths are performing badly or well, or more importantly if revenue collected matches revenue that SHOULD have been collected.  

The issue has been raised by the President of the All India Motor Transport Congress, Bal Malkit Singh. However, he isn't that interested in the revenue, but in replacing tolls with a permit system that would allow commercial vehicles to pass through toll booths unhindered - much like the Eurovignette that operates in five EU Member States.

Yet it would be a mistake to embrace that idea. Replacing tolls with effectively a flat rate annual charge would not take into account usage and so in a country with reasonable economic growth, it would be mean revenue would not match growth in network usage.

A better solution would be electronic tolls, as this would save time and enable vehicles to be linked by accounts (and would reflect usage). The first step being to use a DSRC system to open barriers automatically (fully free flow tolls requires an enforcement system).

This would reduce compliance costs to users, would mean greater security of revenue collection and provide an opportunity to update a toll plaza to avoid the risk of revenue leakage.

It suggests there should be a national toll strategy that sees tolling progressing towards greater use of technology, more intelligent pricing and allowing it to be a more holistic form of revenue raising from road transport.   The foundations are there for tolling to achieve multiple policy goals in India, if it can just be more strategic with it.

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