Thursday, 30 August 2012

Tolling of cars in the European Union

Following on from yesterday's post, the European Commission also released this map of national tolling arrangements in the EU.

Tolling in Europe (cars only)
This time there are fewer categories, as it only involves light vehicles.

Toll with physical barriers (distance-based charge)
6 Member States have extensive toll road systems, using manual tolls (universally with electronic options).  These being Ireland, France, Spain, Italy, Greece and Poland.  Of course there are manual tolls in other EU Member States (Germany, Netherlands, Denmark/Sweden, UK), but so few as to not comprise a network of toll roads.   However, the depiction of these as involving distance based charges is a misnomer.  Whilst there is some corollary to distance, it isn't about pure distance and is not always based on this.  Still it gives a clear picture of where conventional tolling has been dominant for charging cars.

Vignette (time-based charge)
7 Member States have vignette systems, whereby access is bought in advance for periods ranging from 4 days to one year.  These countries are Austria, Czech Republic, Slovakia, Slovenia, Hungary, Romania and Bulgaria. Of interest is that Hungary and Romania have fully electronic systems, with a vignette needing only to be bought online with a number plate registered, rather than the stickers offered in other countries.

Vignette under preparation
Belgium is the only EU Member State currently considering introducing a vignette for private cars.  However, it will be of interest as to whether Germany chooses to do so, given its size and the extent of foreign car traffic in the country.
Electronic Network wide toll (distance based charge)
Curiously, Portugal gets this classification because it does have a growing number of fully electronic free flow toll roads. Yet it still has manual toll roads too, and it is not the only country with free flow tolls (Ireland has it for one road).  In fact, the only real difference between Portugal and Spain is technology, it is still a country with some major toll highways.

Neither vignettes nor tolls
12 EU Member States - the UK, Germany, Netherlands, Luxembourg, Denmark, Sweden, Finland, Estonia, Lithuania (despite the colour on the map) and Latvia are all classified as having no such charging systems.  Malta and Cyprus come into this category as well (and Belgium would be included if it were not for its decision to pursue vignettes).
 
Conclusion

EU Member States tend to go three ways on charging cars.  Either they embrace tolling for major motorways extensively (which involves charging trucks as well), or they charge vignettes if there is sufficient transit traffic to justify it, or they don't bother at all (using fuel tax and ownership taxes to raise revenue). 

What trends are appearing?  Clearly manual tolls will evolve over time to include electronic tolls, but this is hindered by enforcement difficulties across borders.   In addition, vignettes appear to be gaining in popularity as a way of raising revenue from foreign traffic (but needing to charge all vehicles equitably to be compliant with EU law).  Rumour has it that Germany is considering such a move, which would transform the impacts of vignettes in Europe considerably.

Wednesday, 29 August 2012

Truck tolls/HGV road user charging in the European Union

Heavy Goods Vehicle tolling in the European Union
So which EU countries charge trucks (defined as goods vehicles over 3.5 tonnes Gross Laden Weight) to drive on their roads?

The European Commission has published this interesting map depicting the EU Member States that have road pricing for heavy goods vehicles.  It classifies countries into six groups:

- Vignettes (a charge based on pre-paying for access to the network for a period ranging from one day to one year).  At present Bulgaria, Romania, Hungary and Lithuania have national vignette systems for trucks.  Sweden, Denmark, the Netherlands, Belgium and Luxembourg share the "Eurovignette", which is a single common vignette that provides access across all of those countries (so is genuinely "interoperable").  In three of those countries (Denmark, Belgium and Hungary), these systems are subject to plans to replace them.  Already Germany, Austria, Poland, the Czech Republic and Slovakia have abandoned them in favour of electronic tolling.

- Countries developing vignette systems.  At present, the UK and Latvia are both developing vignette systems for trucks.

- Electronic network wide tolling (with distance charging) In the US this might be called "VMT".  This covers both GPS based and DSRC based distance tolling.   It includes the well known examples in Germany, Austria and the Czech Republic, along with the more recent examples of Slovakia and Poland.  However, it also includes Portugal, which is a slight surprise.  Portugal doesn't quite have a nationwide network of tolling across all major highways, but many of its major motorways are tolled on the fully electronic Via Verde system.   It would appear that Portugal is included because it has a far higher preponderence of fully electronic tolling compared to Spain, Italy and France (which are more similar).   Portugal's system, but it is not on a network scale like most of the other examples.  

- Countries developing electronic network wide tolling.  Denmark, Belgium, France and Hungary are included in this list.  France is the most advanced, but will only be applying to existing untolled state owned motorways.  I will be writing more about Belgium and Denmark shortly as further details have been recently released.  Hungary has been more problematic, not least because the Hungarian government has had an on/off relationship with progressing this issue.

- Manual tolls.  This seems to only include countries with significant amounts of tolling, as it includes Ireland, France, Spain, Italy, Slovenia and Greece only.   Given quite a few countries have manual tolling, it is more a case of those for which manual tolls are regularly used on major highways, rather than incidental.

- No tolls.  At present this includes Finland and Estonia (with Latvia and the UK also included but developing vignette systems).

As you can see, there are three clear policy options regarding truck tolling adopted by most EU Member States. The clear trends are to either have extensive conventional (manual) tolled highway networks, or to charge for access to their networks either by time or distance.

Footnote:  It's worth noting for readers outside Europe, that the obvious big blanks in the map (notably Switzerland and Norway) are for countries that are not Member States of the European Union.  However, Switzerland does have an electronic network wide tolling system for trucks, and Norway has an extensive system of toll roads across the country.   Croatia is likely to become an EU Member State shortly.   Malta and Cyprus do not have truck toll systems although both are EU Member States.

Tuesday, 28 August 2012

Opposing sides argue on fuel tax in the UK

To many motorists, including motoring lobby groups, fuel tax in the UK is high.  It is currently nearly £0.58 per litre (US$0.92 per litre or US$0.20 per gallon).  Compared to the US or Australia, this is very high.  Compared to continental Europe it is at the higher end, although some may argue that it is unreasonable to compare fuel tax on its own, when many European countries have extensive toll road networks.  Nevertheless, the issue is highlighted by the fact that far more is recovered in taxation on fuel than is spent on the networks the vehicles consuming that fuel use.  Increases in fuel tax in the UK are never related to increases in spending on roads.

However, some share an alternative view.

Both these views have been getting aired in the UK press in the past week.

Freeze fuel tax

Populist tabloid newspaper, The Sun along with the pro- free market lobby group the Taxpayer Alliance, has launched a campaign to freeze fuel duty in the UK and highlighted it by putting some of its famous "Page 3 girls" at some service stations holding signs to highlight how much the price of fuel in the UK is comprised of tax.  It claims 60% of the price of a tank of petrol is tax (including VAT of 20%).

The Sun and the Taxpayers Alliance want any future planned increases in fuel duty deferred indefinitely (a 4p increase was planned recently and deferred till January 2013).   A special website has been set up for people to send messages to their local MPs to support the campaign.

NJP_4071 edit
The Taxpayers Alliance press release claims the UK has the highest fuel tax in Europe, although it is not always easy to get a reliable figure on this.   It undertook research that it claims shows:

- Motoring taxes raised £31.5 billion in 2009
- Expenditure on roads was £9.9 billion and the "social cost of emissions from road transport" was £3.5 billion
- This is claimed to indicate that motoring taxes are £18 billion a year higher than they should be and that people in rural areas face the highest burden relative to what they gain from the system.

Increase fuel tax

The opposite view is expressed by the Institute for Public Policy Research (IPPR), a centre-left think tank which argues that fuel tax should be raised and road pricing widely introduced, as well, to raise funds for public transport.   It argues on a distributive basis that increased public transport fares fall most highly on those with lower incomes, but motorists can change behaviour more easily by cutting unnecessary journeys and switching modes.  Its key point is that the cost of motoring has been progressively reducing in real terms over time, unlike the cost of living or public transport fares, and that tax policy should "redress" this.  It argues that public transport users have little alternative, but road users do.

IPPR is motivated by support for "sustainable transport" and wants to encourage radical mode shift by state expenditure on walking and cycling infrastructure, and subsidising bus and rail fares more.  It seeks to do this by taxing motorists more.  It sees this as fitting an agenda of redistribution of wealth, improved environmental outcomes and improved social equity.  Its full report is here.

Commentary

A key issues with UK motoring taxation is a complete absence of any principle or transparency around what it exists for.  Whilst taxes on alcohol and tobacco are explicitly to reduce consumption, it isn't clear whether similar taxes on road transport are designed to reduce usage and what the impacts of that are.  There are sound reasons to have such taxes in the absence of road pricing, because they are a way of recovering public sector expenditure on highway infrastructure.  Arguments can be made on incentivising behaviour to reduce externalities, such as emissions.  However, fuel duty is demonstrably woeful in reducing congestion.  The best that can be said for it is that it is a cheap way of raising money to pay for a road network (although not efficient in recovering such costs in a way that reflects the proportions of costs that should be paid) and that it can incentivise the purchase of vehicles with lower emissions. 
At the moment it appears that motoring taxation in the UK vastly over recovers both infrastructure and environmental costs.  

However, the IPPR argument about motoring costs reducing relative to the cost of living seems spurious and coincidental.  The same argument could be made about air travel, home appliances and clothing, but (with the exception of the first) I have yet to see arguments in favour of taxing new TVs, shoes or other consumer products or services that are reducing in price in real terms.   The reason public transport fares have been increasing in because of the distortion of many years of subsidies that are now being reduced.  With the exception of road use and taxation, motoring operates in a free market that has seen costs for new vehicles reduce over time and maintenance reduce.  However, public transport is far more regulated and susceptible to price increases due to increased labour costs (negotiated under dominant labour suppliers through unions).

The argument that public transport users have no alternatives, but road users do is difficult to sustain outside certain specific contexts.  People may relocate, and people in greater London locate due to public transport now.  Road users outside major metropolitan areas have little alternative either, but this seems to be ignored.

The IPRR arguments regarding equity and access to transport are worthy of consideration, but it is questionable whether it is equitable to treat motorists as the "rich" users of the transport system, and public transport users as "poor".  Certainly there are many tens of thousands of commuters by rail into central London each day on incomes well above the national average, and similar numbers of car commuters elsewhere who are the opposite.  

On sustainability, it is worthwhile for some more scrutiny to be paid to attempts to define what is the most optimal option from environmental, social and economic points of view.  As road vehicles become ever cleaner burning, there needs to be some decent objective research on when rail and bus services cease to be sustainable, and for there to be efforts to consider that denying capital expenditure on some road improvements to reduce congestion, is not a sustainable action.

However, the highest priority should be to define what motoring taxation is for.   If it is to pay for roads, then let's have some relationship between part of that and road expenditure.  If it is to pay for environmental costs, then identify the proportion of taxation that is for that.   If it is to pay for alternatives, then do that based on the extent to which they benefit those paying the tax.

In other words, start relate the price (tax) to what is being paid for.

Tuesday, 21 August 2012

News Briefs - Australia, Brazil, China, India

Australia - Melbourne's car park congestion tax to stay despite low impacts

Public broadcaster ABC reports that the Victorian Government is likely to keep the tax on inner city car park spaces intended to reduce congestion, despite a study that claims it has had little effect on congestion.

Inner city parking taxes are often cited as low cost alternatives to implementing congestion pricing.  50,000 car park spaces in downtown Melbourne are subject to such a tax which is either A$650 (US$682) or A$910 (US$956) a year depending on the location.  The tax was introduced in 2006 and raises A$46 million (US$48 million) a year in revenue for the Victorian State Government.

A Monash University study indicated that part of the tax was being absorbed by car park operators and that there was minimal impact on congestion, it suggested that a better option would be a cordon based congestion charge, although motorist lobby group the RACV (Royal Automobile Club of Victoria) rejected that in a report in the Herald-Sun newspaper claiming motorists are already over taxed, preferring more money to be spent on transport projects.

Brazil - Expiring toll road concessions to be retendered

Nasdaq reports that according to the Estado de S Paulo newspaper, the Brazilian government has decided that when the first toll road concessions expire in 2015 it will re-tender them with the intention that rates of return should be lower.   It will also specify that tolls can only be charged after a certain proportion of improvements to highways have been undertaken by a concessionaire.

"To ensure that 5,700 kilometers of two-lane highways are expanded into four-lane highways by 2018, the government will stipulate that operators start charging tolls only after 10% of the lane-duplication process is already executed" ..."As part of a package to improve transportation infrastructure, the federal government plans to license 7,500 kilometers of highways to private operators for a 25-year period".

Concessionaires have expressed concern that environmental licencing imposes a cost on development that will slow down the period between when they start work on a project and can start charging tolls.


China - Beijing traffic plan includes concept of congestion pricing

Global Times reports that Beijing is to get congestion charging included in its latest traffic plan, although there are no details about what congestion pricing will look like for the city.  The article has comments from an academic who says Beijing also needs more rail and congestion is inevitable with fast growth, but also a local resident who uses public transport and supports the idea.  I wrote some time ago about potential options for congestion charging in Beijing.

India - Macquarie SBI buys into Indian concessionaire

According to NetIndian News Network, Australian/Indian joint venture Macquarie SBI Investment Fund (MSIF) (comprising Macquarie Capital Group and the State Bank of India) has announced it is investing US$150 million into Ashoka Concessions Ltd (ACL) of India, along with SBI Macquarie Infrastructure Trust.  It would appear likely that the reason for the MSIF (and SBI Macquarie Infrastructure Trust) is that Macquarie Capital is restricted from investing in its own right in Indian infrastructure because of foreign ownership limit laws (and the State Bank of India is keen to use foreign capital and expertise).

ACL is a 100% subsidiary of Ashoka Buildcon Ltd (ABL), an Indian engineering and construction firm.  ACL reportedly owns 7 concession toll roads comprising 3,018 lane km (630 length km). ABL itself has a portfolio of 12 Build Own Transfer (BOT) road projects in India (with 6 under construction) excluding its portfolio of footbridges.  Not all of these projects are tolled.

ACL's projects have a construction cost of US$1.5 billion.  78% of the traffic is commercial.  Average remaining concession period is 22.7 years.  This is MSIF's first road investment and will comprise 13% of MSIF's portfolio value.

Macquarie SBI published a presentation with more detail about the investment.

Sunday, 19 August 2012

Infrastructure Australia recommends road pricing and privatised toll roads

An article by Tim Colebatch, economics editor of Melbourne newspaper The Age, comments on a proposal by Infrastructure Australia (a federal agency to plan and co-ordinate major infrastructure projects, particularly those with interstate dimensions or effects) that toll roads be privatised and the sales proceeds used to finance further new road and rail projects.

It isn't state or federal policy yet, but the essence of it is almost a reversal of the traditional public-private partnership model (PPP) of letting the private sector finance, build, own and operate a toll road then let it transfer to public ownership, by selling existing roads and using that money to finance future ones, with the "sale" being a long term lease, so that the road can be "sold" time and time again.

Colebatch is open about the political problems and limitations involved, but dismisses most of the reactions as kneejerk prejudices, and if people want major new infrastructure there needs to be innovative approaches to paying for it.  He doesn't express a clear view in favour of it, although he has a vague concern about issues arising from multiple private owners.

Infrastructure Australia's report

Given discussions in the UK about highway privatisation and great concerns in the US about the means to pay for highway renewal, the report from Infrastructure Australia is timely and shouldn't simply be read in the context of Australian problems.  

Some key findings from the report, relevant to this blog:

- "Avoidable" congestion is estimated to cost the Australian economy A$20 billion (U$21.1 billion) per annum by 2020.  (pg.2)

- "The traditional model of government grants conceals the real cost of infrastructure to the community in the form of taxes. Here, users do not directly see the contribution they make, resulting in the tendency for infrastructure assets to be overused. The costs of such perceived ‘free’ access to roads are already being felt particularly though congestion in our cities. Just expanding the current supply of roads is rarely a final solution." (pg. 4)

- "The concept of road user charging is not new to Australian drivers as many of the major thoroughfares in Brisbane, Sydney and Melbourne are already tolled. If the community wants better infrastructure of this kind it needs to reconsider its willingness to pay for such projects."(pg. 5)

- "A network charging regime could also provide consistency and equity for users, as well as appropriate price signals for users to facilitate more efficient outcomes. Currently, user charges are levied on an ad hoc basis, which can result in a network with little apparent rationale for user charges, and contradictory signals for transport choices. A distance based toll may also have greater acceptance rather than a flat fee charged regardless of distance travelled." (pg.12)

- "Another form of user charges is a model that focuses on the application of tolls on freight vehicles in order to fund freight-specific road upgrades and bypasses that improve freight efficiency.  An example might be a part link or bypass project that is funded exclusively through a toll on freight vehicles." (p. 12)

This leads to conclusions that there could be more tolling, but that tolling could be applied more widely so that it is seen to be fairer.  There is also support for tolling trucks, but the idea that it could be used to fund specific road freight projects is curious.  The main reasons road user charging for trucks are introduced are to do with efficiently recovering maintenance costs from the vehicles that generate the greatest marginal costs on the network.  However, it may well be that if this is to be considered in Australia, a link needs to be made to projects that benefit freight.

The notable first recommendation is:

Recommendation 1: Governments should implement targeted measures such as user charges to enhance price signals to better balance supply and demand, and to increase the funding available for infrastructure investment.

Of course, it is tricky when some charges are at the Federal level (fuel tax), but others at the state level (taxes on vehicle ownership).

Also relevant is:

Recommendation 2: State and Territory governments should identify and monetise suitable public assets, allowing the freed up capital and avoided debt repayments to be recycled/invested into infrastructure projects.

This means privatisation of some roads.

In Appendix 5 the report has some valuable points on road pricing, in essence it comes down to the point that users need to see value in what they are paying and that they are not being double charged:

Applying user charges to other fixed infrastructure assets can be investigated – in particular for roads. Road charging options include: tolls, network charging, congestion pricing, distance driven, High Occupancy Toll lanes.

Work on user charges for heavy vehicles is already underway through the COAG Road Reform Plan.

However, the idea of user charging can be unpalatable where consumers perceive they are paying twice – that is, already paying for roads through income taxes, fuel surcharges, car registrations etc, but then expected to pay again through a toll (or are redirected onto toll roads).

Road users are more accepting of a toll if they perceive a utility benefit such as a time saving, a better asset or the delivery of a new asset much sooner than otherwise would be the case without funding through a charge.

User charging may also be more acceptable if applied in conjunction with a range of other reforms such as transparency in pricing, rebates or discounts in taxes/surcharges, and the availability of alternatives or improved services (such as better public transport).

Given that the Australian Government owns very few infrastructure assets, the support of State and Territory governments to implement this option will be needed. There is unlikely to be a uniform approach to user charging across the country given the different attitudes towards user charging from State and Territory governments.

The report tries to point states in the sorts of directions needed to successfully expand road pricing.

In Appendix 1 the report cites a successful PPP toll road in Australia as a good example of what is done now:

The Westlink M7 motorway project in Sydney is widely regarded as a successful example of a Public Private Partnership. The estimated cost was approximately $1.54 billion, with the Australian Government contributing $360 million. The Westlink Motorway consortium selected to operate and maintain the M7 was provided with a 34-year concession term after which the asset will revert to the NSW Government. Construction started in July 2003 and the road was opened to traffic in December 2005.

The M7 demonstrates what can happen when governments effectively plan for the long term, efficiently share risks and incorporate appropriate price signals into infrastructure projects through user charging. For the M7 this is implemented by electronic tolling with the price of the toll capped in real terms. There may be scope to extend the tolling operation at the end of the concession. Another important feature of the project is that the NSW Government also shares in upside demand risk where actual revenue exceeds forecast revenue. This project has led to the building of a substantial piece of well-utilised infrastructure largely financed by the private sector.

It also cites the US TIFIA programme as having useful elements in an Australian context.


Conclusion

Australia's public sector continues to be capable of producing high quality pieces of policy analysis with largely sensible conclusions.  Although this report has a scope wider than roads, many of its recommendations are broadly relevant and in the right direction.  The big issue is what role the Federal Government can have.   Given it levies fuel taxes now, it ought to look at what to do about that and a transition from that as a step forward, and so the issue of heavy vehicle charging becomes an obvious possible first step (shifting from vehicle ownership and fuel taxation to user charges).  However, given states have different levels of enthusiasm for tolling, the powers at those levels are more difficult to direct. 

Public acceptability is the key, and Australians are, by and large, not used to being charged to use roads that were previously free.  To widen the scope of tolling in any form will require some quid pro quo around both existing tolls and existing taxes.  

That is the issue the report did not address.
 
Whilst there remains taxes on owning vehicles and fuel, having additional ways to pay for road use on roads which are not currently tolled (and so are not perceived as having a free alternative), will be controversial.

It can't be just about new revenue, it has to be about a transition from existing revenue sources.

Friday, 17 August 2012

Massachusetts permitted to use Turnpike revenue on other roads

Generally speaking, tolling can be undertaken either at specific points on a road or continuously along an entire journey.  Conventional tolling finds fixed points on a road network to charge the road user, whereas distance based road user charging, vehicle mileage tax, time-distance-place road pricing, is about charging a vehicle for its trip on all roads.

It is fair to say that as vehicles don't typically carry the technology to allow the latter, and governments (which own and operate most roads) don't have the political will to shift towards that, there is a preference, for now, to stick with conventional tolls.

So what does a government do when it finds it difficult to raise fuel taxation, but has a series of toll roads which are happily generating surplus revenue, and has a difficulty meeting demands for funds for road maintenance.   Does it divert the surplus from the profitable toll roads into untolled roads?

That's what Massachusetts did and it upset more than a few.

For many a toll road should be self-contained.  The toll should be related to the road it applies to, and the money raised should be enough to pay for its capital and maintenance costs (and upgrades), not to pay for other roads.  

Yet an alternative view is that if the state has assets that are profitable, then why not treat those assets as businesses that can be used to support related infrastructure?

In 1997, Massachusetts faced a problem.  It was the cost of the Big Dig, possibly the world's most expensive urban highway scheme ever (at an eye watering US$22 billion).  The state decided to start using money from the Massachusetts Turnpike to pay some of those costs. 

The Newspaper.com reports on what happened when some of those motorists were unimpressed:

In 2009, turnpike users sued the turnpike authority over 58 percent of their toll money -- $440 million -- being siphoned off for the expensive tunnel, which they argued changed the money from a "user fee" to a tax under the state constitution. The coalition of motorists and trucking associations behind the suit argued the system was also fundamentally unfair.

"The majority of travelers who use Metropolitan Highway System (MHS) facilities each day pay no tolls at all: MTA collects tolls from only 46 percent of the travelers who use MHS facilities each day, allowing 54 percent of travelers to pay nothing at all for their use of the most expensive part of the MHS," lawyers for the plaintiffs argued. "This court should not hesitate to invalidate a tolling scheme that impermissibly functions like a tax or that unreasonably or disproportionately burdens those who are singled out to pay tolls."

The court judgment summarised the claim as:

"according to the plaintiffs, the tolls are lawful user fees when applied to pay the expenses of the tolled roads and tunnels, but an unconstitutional tax when applied to pay the expenses of the nontolled roads, tunnels, and bridges."


The tolls "were collected to compensate the authority for the expenses incurred in operating the MHS (and limited by statute to the amount necessary to pay those expenses), not to raise revenues for the commonwealth...Where, as here, a public authority manages an integrated system of roadways, bridges, and tunnels, and chooses to impose tolls on only some of the roadways and tunnels in an amount sufficient to support the entire integrated system, its purpose does not shift from expense reimbursement to revenue raising simply because the toll revenues exceed the cost of maintaining only the tolled portions of the integrated system... Because we conclude that the tolls collected by the authority on the MHS were fees, and because we conclude that they would still be constitutional excise taxes even if they were taxes, we affirm the dismissal of the plaintiffs' state constitutional claims"

In other words, the Court treated the Turnpike as part of an integrated network and that just because tolls have not be imposed on all of that network does not mean revenue can only be spent on the tolled segments.  It treated the tolls as "user fees", because they could be avoided by driving on untolled roads (taxes can't be avoided).

Massachusetts can happily continue to reap profits from its toll roads to cross-subsidise the rest of its network (and so offset other taxes).

Background

The Massachusetts Turnpike is one of the oldest toll roads in the USA and is essentially an east-west artery from New York State (where it connects to the tolled New York State Thruway) to Boston.  It is part of the Interstate highway network, being the easternmost end of I-90.  It utilises both manual tolls and the basic "Fastlane" DSRC (RFID) toll tag system (soon to be transferred to the EZPass franchise which it is interoperable with).   Wikipedia has an excellent map depicting how important the Turnpike is to the state.  Within Boston, part of the "Big Dig" project includes a link used as part of the Turnpike (the Ted Williams Tunnel which itself is tolled in one direction) which completed its connection to Boston Logan International Airport.

Thursday, 16 August 2012

News Briefs - Brazil, China, India, Indonesia, Philippines, Portugal

Brazil - Canada's Brookfield and Spain's Abertis invest in Obrascon

The Globe and Mail reports that Brookfield Infrastructure Partners LP and Spain's Abertis have formed a joint venture (49/51) to buy a 60% shareholding in Obrascon Huarte Lain Brasil SA.  The price for the consortium is around US$1.72 billion, and the consortium is willing to purchase the remaining 40% if required.  Canadian Business reports:

OHL Brasil is one of the largest owners and operators of toll road concessions in Brazil with more than 3,200 kilometres of roads in states that account for approximately 65 per cent of Brazil's gross domestic product and are home to nearly two-thirds of the country's 70 million vehicles.

The deal means that Obrascon's Spanish shareholders, Obrascon Holdings Ltd, acquire 10% of the stock of Abertis (it already has 5%) raising its shareholding to 15%.  Obrascon effectively maintaining an indirect interest in the Brazilian toll road business.  OHL Brasil has nine toll road concessions.

 
China - public holidays to be toll free

The Wall Street Journal reports that the Chinese Government has announced that cars should be able to drive toll-free on public holidays.  This includes all privately owned toll roads.   The measure is designed as a popularity move as car ownership soars, but most car trips are relatively localised as car owners baulk at paying tolls to travel long distances.  The report says:
Moody’s says the decision will knock up to 5% off toll income this year at Shenzhen International Holdings, a Hong Kong-listed operator of 17 Chinese toll roads.

What will be curious is whether it results in congestion on those days, and whether it will impact on the viability of some future projects.  Another report implied that this was a politically driven move, designed to win favour with the growing middle-upper classes, indicating that regardless China's one-party system, the government is sensitive to public opinion given the ease by which people can express concern or dissent via the internet.
 

India - Taj Mahal toll road opens

I don't typically report on the opening of toll roads, because there would be far too many to report.  However, this report from travel website Wanderlust caught my eye as it is about a new toll road from Delhi to Agra, effectively connecting the capital to the Taj Mahal.  The private expressway is 165km long, six-lanes wide, cost US$2.17 billion to build and the toll is around US$9 as it halves travel time on the route.

 Indonesia - Jasa Marga buys part of PT Translingkar Kita Jaya

The Jakarta Post reports that Indonesia's large state owned toll road company, Jasa Marga, has bought a 21.24% shareholding in private toll road consortium PT Translingkar Kita Jaya for the equivalent of US$14.6 million (Rp137.9 billion).  The company operates the 14.64km Cinere–Jagorawi toll road which is divided into three sections. The first section is 3.7 km from Jagorawi to Raya Bogor, the second is 5.5 km from Raya Bogor to Kukusan, and the third is 5.4 km from Kukusan to Cinere.  The first section is operational, the second to open later this month and the third in May 2013.  33,215 a day are expected on the road by the end of 2012, growing to 47,816 in 2014.

"The acquisition of Translingkar is a part of the company’s plan to maintain sustainable business expansion,” Jasa Marga said in a written statement.

The report notes that Jasa Marga operates 545km of toll roads in Indonesia, estimated to rise to 738km by 2014.

It continues by saying:

The company explained that Indonesia’s toll road development is lagging behind neighboring countries such as Malaysia, which currently has around 4,000 kilometers of toll roads. Meanwhile, Indonesia — the largest economy in Southeast Asia — only has around 750 kilometers of toll roads.

No doubt this is in part due to the fact Indonesia is an archipelago, although the bulk of economic activity is on Java, the main island which has the majority (60%) of the national population (and congestion).



Philippines - Metro Pacific Tollways to be delisted, minority shareholders bought out

Business Mirror (Philippines) reports that  Metro Pacific Investments Corporation (MPIC) is to delist its subsidiary Metro Pacific Tollways. It intends to do so by the end of the year because only 0.15% of Metro Pacific Tollways is floated, a proportion considered inadequate by the Philippine Stock Exchange.  The Stock Exchange has warned companies with less than 10% floatation that it would suspend trading in their stocks from 2013 before compulsorily delisting them.  MPIC intends to buy out the minority shareholders, which at current market prices would only come to around US$1.2 million.  MPIC Chief Financial Officer David Nicol said the strategy would then be to consider strategic partners to invest in Metro Pacific Tollways. 

Metro Pacific may generate considerable interest given the roads it owns and the concessions it has rights to, given the prospects for potential growth in Philippines as its roads are significantly superior to the untolled alternatives.

Portugal - Abertis sells its shareholding of Brisa to Tagus

Following a report in July that Abertis no longer considers its investment in Portuguese toll road operator Brisa, as strategic, Bloomberg now reports that Tagus has acquired that stake (15% of the operator).  Tagus’s partners are family-owned holding company Jose de Mello SGPS SA and London-based Arcus Infrastructure Partners LLP, and already own a combined 49.6% of equity in Brisa, but 53.8% of the voting rights. Bloomberg seems to indicate that Tagus is seeking to raise its stakeholding to 90% so it can delist Brisa.

The report says that :

The disposal of Abertis’s entire stake in Brisa will generate 312 million euros ($386 million) in cash flow.

Tagus, a venture formed by Brisa’s two biggest shareholders, offered 2.76 euros a share in July .

This followed an offer in March 2012 of 2.66 Euros per share, and Abertis noting a distinct lack of interest in buying the shareholding, no doubt reflecting concerns over Brisa's exposure to Portuguese toll roads in the current recessionary climate in that country.   Abertis appears to have decided to take what it can as it effectively exits the Portuguese toll road market.   The Tagus bid compares to a share price of currently 2.09 Euros following the deal.

Tagus noted that it wasn't obliged to buy more shares after the deal with Abertis, so that many shareholders now indicate that they think there are unlikely to be any significant buyers for the Abertis shares now that Tagus has 85% of the shares in Brisa.

Wednesday, 15 August 2012

Cardiff Council considering congestion charging

(No I didn't simply try to create alliteration)

I wrote last year about a proposal from the Cardiff Civic Society for the Welsh capital to introduce congestion pricing, and I believed it was highly unlikely.  Indeed, beyond London, attempts to introduce congestion charging in other UK cities (notably Edinburgh and Manchester) have floundered due to widespread opposition (excluding the tiny Durham charge which is about protecting the small historic centre).   Cardiff will face the same issues of public acceptability.

Wales Online reports that Cardiff City Councillor Ralph Cook has said that Council officers have been asked to examine the merits of the idea.

The report indicates that a Cardiff congestion charge is likely to only apply at peak times and he is promoting the idea of only charging "out of town" motorists, suggesting a rather large cordon surrounding the city to capture long distance commuters. 

The purpose of the charge is apparently open, with one suggestion that it could help pay for maintaining the road network (which would mean a reduction in council tax (a tax on residents)) or pay for improved public transport.   Frankly, I think this is at the crux of the issue of public support.   

The biggest issue for most people facing congestion charging is "what am I paying for".  Toll roads that are new are accepted because they are new and motorists perceive they are using what they are paying for.   However, charging existing roads is problematic.  Giving Cardiff residents a cut in other taxes would make a big difference.

The politics are curious.  In the local elections a few months ago the Labour Party won back control of Cardiff Council from the Liberal Democrats.  Labour is promoting the idea, but the Liberal Democrats oppose it, even though the Liberal Democrats tend to be seen as the most pro-environment, pro-public transport and anti-car (the central government manifesto in 2010 pushed for a big cut in road spending to be redirected to public transport). 

Opposition is based on two points:
-  Local businesses will be harmed; and
-  Public transport isn't good enough as an alternative (an argument that is floated more often than it is valid).

A further report from Wales Online quotes "Professor Stuart Cole, from the University of Glamorgan’s Transport Centre".  He claims that it "wont work" without public transport, and that it can't be justified for revenue alone.  He also says that it would otherwise push employment to Swindon and Bristol and other cities on the main M4 motorway corridor towards London.

Really?

In itself, if it is imposed as an additional charge, he has a point.  The likelihood is that Cardiff will be seen as less attractive, especially if the money raised does not go into improving the highway network in ways that offset it.  The big risk for any city introducing congestion pricing is perception, rather than reality.  Yet of course it could raise more revenue and reduce congestion.  The goals are not mutually exclusive, rather they affect the level of pricing.  Revenue maximisation and traffic flow optimisation levels are unlikely to be the same. 

However, will it not work without more public transport?  Well this is an oft-repeated claim, because it is believed that those deterred from driving must all shift onto public transport.  This simply isn't true.   It remains a serious myth that those who used to drive into central London now mostly ride the bus.   This notion is patently absurd, as the sheer cost of parking in central London was such that it is highly unlikely that the demographic who drove would choose to ride on buses, which are significantly slower than driving.

According to research by Transport for London, what happens is more complex (see Table A.2).

Around 54% of motorists shifted to public transport, but 8% shifted to active modes, taxis or sharing rides with others.  Around 23% diverted their trips to avoid the charging area (using ring roads rather than cutting through centres).  Another 8% simply drove less frequently (took less trips) and 7% drove at different times.

A peak time only scheme is more likely to significantly increase the change in travel times.  For public transport, with congestion charging there would be more road space for buses, and the demand for private and the Council owned commercial Cardiff Bus operation to expand services.  Cardiff's suburban commuter rail service is already earmarked to be electrified in the next decade or so, providing ample scope for additional capacity.  

Yet there is unlikely to be much support from the public.  A local TV news bulletin indicates a great deal of scepticism. Certainly without either promising better roads or reduced other taxes, it is unlikely most motorists would support it.

Conclusion

Whether or not Cardiff benefits from a congestion charge depends on:

The design of the scheme:  The more likely it targets congestion where and when it happens, rather than be a blanket simple charge, the more likely it is to improve the city's competitiveness;
What is done with the money:  A significant proportion of any revenue either needs to go on improved roads or is recycled into council tax cuts.

A badly designed scheme used to direct revenue into politically totemic transport projects is unlikely to improve the competitiveness of the Cardiff economy, but a tightly defined one that is used to reduce other taxes or spend on long deferred (objectively) high value transport projects may do so.

 To do that, it actually needs to reflect on the experiences of more cities than London.

Tuesday, 14 August 2012

Brazil to have compulsory toll tags by July 2014 (SINIAV)

In the past week, Austrian-based toll system supplier Kapsch published a press release announcing it had won a contract to supply tags to Brazil.

Not particularly significant for anyone beyond Kapsch on first appearance, but in fact it is something a little different from simply supplying tags for a toll road. The press release alludes to Brazil's programme for a national compulsory electronic vehicle ID system that, in effect, means all vehicles in Brazil having what is equivalent to DSRC based toll tags.

The press release states:

SINIAV (Sistema Nacional de Identificação Automática de Veículos) is organized by the Ministry of the Cities (MC) and the National Traffic Committee (CONTRAN) in Brazil and foresees the mandatory electronic registration for all vehicles in the country, including passenger cars, trucks and motorbikes. 

All very well, and let me be very clear.  The press release does not claim Kapsch is the supplier of tags for all vehicles in Brazil or even part of them, but it also does not link them to toll roads, so the impression is that Kapsch is at least a partial supplier of tags for vehicles in Brazil.

So what is SINIAV about? Well the allegedly official website for the programme (it was on the Kapsch press release but I am unconvinced given the content on the website) has rather limited information.   I am unconvinced that the site is official because it contains language (admittedly in Portuguese) that raises some of the privacy concerns around the system.
 
It claims:

The SINIAV tag will include data on the number of the chip, board, chassis and vehicle identifier (registration number). 

The programme was authorised by law in 2006 with the primary motivation being to address vehicle related crime, a secondary one to help in fleet management of commercial vehicles It also claims that the system will mean the “end of auto theft” because the Police will be able to identify through triangulation the location of the vehicle (presumably the Police will be “polling” vehicles constantly for a particular ID or will have fixed transceiver stations to “poll” passing vehicles). 

The website from the Federal Transport Ministry indicates that the tags can be passive or active RFID, indicating either a basic sticker tag or a more sophisticated "beeping, lights" type unit being available.

A lot more useful information came from a presentation at an IBTTA conference in 2011 by Dario Sassi Thober of the Wernhervon Braun Center for Advanced Research.  The Wernhervon Braun Center appears to have been contracted to develop security and data protocols and design for the standards used for SINIAV.   The key points from Thober's presentation are:

- SINIAV is linked to state and national vehicle databases, as it is states that manage vehicle registration, but the national agency DENATRAN manages the exchange of such data. The system is designed to be seamless with the creation (and presumably change and destruction) of vehicle number plates.   It will facilitate states requesting data about vehicle owners related to traffic and criminal law enforcement.

- SINIAV is also intended to provide a platform for electronic free flow tolling across Brazil, reducing and ultimately eliminating the need for manual tolls and automatic number plate recognition systems.  This will greatly facilitate more tolling and ease the difficulties in implementing urban congestion charging in cities such as Sao Paulo;

- 30 June 2014 is the deadline for all vehicles to have tags installed, including motorcycles.  The SINIAV website suggests that by the end of August 2013 all new vehicles sold in Brazil will have to be equipped.

- SINIAV has a centralised national back office retaining data not only of vehicles but also violations and other irregular activities which may be legal or financially related (e.g. tax or debts). Thober’s presentation has a good representation of the data flows for the initiation of a vehicle into the system.

Related to SINIAV are two other programmes.  

One called Brasil-ID will use SINIAV technology for cargo tracking, both based on the vehicle and on the cargo itself (by attaching RFID tags to containers and pallets). Brasil-ID is about truck cargo identification, tracking and authentication, and appears to be related to tracking goods for tax compliance purposes (e.g tariffs or local sales taxes) and deterring theft of cargo. 

The other is called SINRAV and includes GPS and GPRS systems to enable real time vehicle tracking.  This would theoretically allow for nationwide distance based tolling (VMT), but is currently subject to judicial review in the federal courts for fear of privacy infringements.   SINRAV appears to be a far longer term programme as it involves more expensive equipment on board vehicles, although it would be necessary to deliver the promise of seriously addressing vehicle theft.

Conclusion

Brazil is adopting an ambition programme that will make it ever easier to introduce tolling on major highways and urban congestion pricing, but it is driven by security.  The one thing SINIAV will do is make it difficult to swap number plates and raise the level of sophistication needed to change vehicle ID, essentially putting out of business a lot of petty theft of vehicles and leaving it to the serious professional vehicle thieves who can afford to spend serious money on replicating SINIAV tags to fool Police checks.

The bigger question is whether such electronic identification of vehicles, which seems like it would be the norm nowadays, could easily be rolled out in developed countries without privacy fears essentially halting it.  Meanwhile, identifying vehicles by a set of letters and numbers on a plate that needs to be visually read looks increasingly anachronistic.  Having that information recorded electronically makes sense, but what matters is how to link that data to the essential vehicle owner information and to protect that.  

SINIAV obviously will be useful in addressing vehicle theft, but could also be used for traffic infringement enforcement (e.g. speeding and traffic signals).  However, its limitations for tolling are essentially the extent to which roadside infrastructure exists to detect vehicles passing certain points on the network.

The logistics of the Brazilian programme are considerable, and I would bet it will be some years before all vehicles are caught.  Just because SINIAV will be compulsory does not mean that it will be universal, and I suspect a good 5-10% of all vehicles are likely to be outside the system for some time, unless Police are incentivised to identify, persuade and compel the outliers to join.

If anyone who is part of the SINIAV programme has anything to add, please feel free to contact me as I am happy to clarify or add more information as it comes available.

Monday, 13 August 2012

Indian toll road concession shows risks in getting PPP wrong


A modern multi-lane expressway should be built to ensure that motorised traffic can avoid all of the risks of surface roads. That means intersections, cyclists, pedestrians and roadside hazards. If a private concessionaire is to be building a road, you’d have thought it should be responsible for all of the infrastructure including lighting. No, not in Haryana State in India.  It's first PPP toll road appears to have involved a serious misjudgment around allocation of responsibilities.

The recently opened Gurgaon-Faridabad toll road has been facing declining traffic at night due to a spate of serious accidents. Why? Because of animals. The Times of India reports that:

cows, bulls, dogs, pigs, goats and even wild antelopes like nilgai wandering on the road. Especially at night, cows and bulls sitting in the middle of the road pose a safety threat to both the commuters and themselves. Even policemen say they can't do much about stray animals: "If you have a road in the middle of a jungle, you will always have the problem of animals wandering on it. But what is noteworthy is the fact that most the cows belong to villagers in the neighbourhood." said Brijwani, traffic policeman posted on the road.

The obvious point is that the road should have been fenced off properly and if there need to be ways for animals to pass over or under it, those routes should have been built, but they weren’t specified. Given how this is the norm in developed countries, it suggests the Indian tendency to not use overseas expertise results in making these sorts of mistakes.

However, even without the fencing, there is the matter of lighting and for some unknown reason the Public Works Department of Haryana retained responsibility for installing lighting and hasn’t got around to it. As a result, in the evenings a lot of traffic returns to the old route because it isn’t safe to travel at speed to encounter cattle. Meanwhile, there is also a problem with speeding due to a lack of enforcement by Police.

This project ought to be a simple lesson in concessioning and should also be a warning to governments that seek to concession to avoid leaving responsibility for any infrastructure matters with local officials.

It should be clear that any private highway concession should include responsibility for infrastructure related safety issues, and that includes lighting, signage and fencing. Concessions can never have responsibility for reckless driver behaviour, but they can have responsibility for ensuring that their infrastructure is reasonably safe for normal users. Haryana state needs to fix this issue swiftly, but I doubt it is well incentivised to act quickly. By contrast, the concessionaire would no doubt happily fix the issue because it is reducing business in the evenings.

Unfortunately, cases like this perpetuate a stereotype of Indian bureaucratic incompetency that is reflected in one comment on the news article:

Not surprised. This is how it happens in India. A malititude of state government agencies will be involved in one project. And for the above road, no difference; one agency will be responsible for constructing the road(reliance), then another for lighting, then another for beautification of the road, then another for flood control, and maybe another to fence the stretch and keep animals off the road(that needs to be done right away) and then another for.....and the story goes on. God bless India officialdom.

It should be obvious that it doesn’t have to be this way.   Note I wrote earlier about the problems this road has with congestion at manual toll booths.  Again, this could all have been avoided had the state civil servants called in expertise from elsewhere.  India has many toll roads.  Shouldn't this sector be organising itself, have regular conferences and be exchanging best practice?

Friday, 10 August 2012

Auckland Mayor keeps pushing road pricing, but Government opposed

As I reported previously, Mayor of Auckland (New Zealand) Len Brown (centre-left) has been looking for ways of raising revenue to pay for major transport infrastructure projects, most particularly the idea of an underground rail loop under the central city.   Auckland's passenger rail system, long neglected, has had well over NZ$1 billion spent on it for track and signal improvements, new stations, and soon to be installed electrification with new trains, but as routes terminate at a downtown underground terminal the idea is that there will be more patronage if over NZ$2 billion more is spent on extending lines underground to connect to the western line.

The problem Brown has is money.  Auckland Council's sole core source of revenue raising is rates -  a tax on the value of land and buildings.  He can't get political support to raise such taxes sufficiently to pay for it.  Nor is the central government transport funding agency - the New Zealand Transport Agency - keen to pay for all of it (it typically will fund up to 60% of the cost of economically efficient public transport improvements, with most of its revenue coming from hypothecated motoring taxes on fuel, distance/weight and vehicle ownership), so Brown is looking for new ways to raise revenue.


Transport Minister, Gerry Brownlee (of the Centre-right National Party) has said no.  The reasons given are that congestion pricing is typically done overseas to reduce congestion not raise revenue (which is true, but it is acknowledged that the latter is always a secondary effect), and that it is unreasonable for Auckland Council to collect revenue from tolling roads which it doesn't control - namely the State Highways (Auckland's motorways).

It does raise the issue as to whether congestion charging would be ok if it was to reduce other taxes (which it could do, by reducing or even eliminating ratepayer funding of local roads in Auckland), but nobody is arguing for that.

The obvious retort would be to design a congestion charging scheme for Auckland, targeted at congestion, on Auckland Council's roads (not charging the motorways).   The problem is, as I've written before, that congestion in Auckland is not nicely confined to the central business district (which would invite a cordon pricing scheme).  Indeed, traffic isn't that bad there at all.  Congestion is spread out, at a wide range of bottlenecks and corridors, and Auckland has a wide range of alternative routes that are used to "rat run" pass such bottlenecks.  To do effective congestion pricing on that scale would require some form of distance charging with GNSS technologies, such as that already used voluntarily as a option to pay New Zealand's nationwide weight /distance Road User Charge for heavy and diesel vehicles.

In other words, true congestion pricing for Auckland is complex and wont be achieved through a London/Stockholm style scheme.

For revenue raising of course, the issue of where congestion is becomes irrelevant.  A better consideration is equity, so that those who pay are those who benefit from the revenue spent or who could benefit.

This is where two options come to the fore.

One is a downtown central city cordon.

Auckland congestion charge inner city cordon concept
That's attractive if only because the underground rail link project is focused on this area and conceptually it can be argued that those still driving to the central city could instead use the railway.  Yet it is unlikely to raise enough revenue, and also seriously challenges the claims of the rail project advocates by creating a gamble over the attractiveness of downtown Auckland.  If the underground rail link is a good idea (and opinions on this are diverse), then a central city cordon pricing scheme will not be a problem, as the rail link will attract many motorists, along with improved buses (with less congestion) so that the city is a more pleasant place to do business with less traffic and a high standard of public transport accessibility.   Yet if the rail link does not deliver, introducing a cordon pricing scheme could make downtown Auckland significantly less attractive for some businesses, which could readily shift to one of Auckland three other urban centres, or out of New Zealand altogether, on the basis that the rail project isn't a good enough alternative for enough commuters (given the railway doesn't serve the North Shore or the central isthmus, this is a risk, although both of those areas are very well served by buses).

A Mayor willing to gamble on this would be brave indeed, although if he is convinced of the business case of the rail project, then he should support this on the basis that the businesses that will benefit the most from the rail project will be paying for it through road access to their premises.   Yet I doubt he will do this, for the same real underlying reason Central Government is opposed to it:

Politics.

The Mayor is advocating tolls on State Highways because they will generate more revenue (far more traffic than a cordon would charge), appear to have an alternative (other roads) and because he would have to get Central Government support.

However, it would appear that the centre-right National led coalition government regards tolling on existing roads to be politically too risky.  The Opposition Labour Party is against it (although it commissioned studies into it whilst in power) claiming it would hurt the poor, yet it advocates a regional fuel tax that would mean all motorists in Auckland, on all roads at all times would pay, instead of just peak commuters on motorways.  The equity concerns around raising fuel taxes seem to be more easily evaded than tolling.

Is public support being underplayed?

Construction sector lobby group the New Zealand Council for Infrastructure Development released a survey result claiming that a majority of Aucklanders would support road pricing (in the form of low tolls on existing motorways in Auckland) if it reduced congestion and funded major improvements.   Its poll said 46% would support a NZ$2 (US$1.64) charge on all access to Auckland's motorways, although 33.4% opposed it. 

The difficulty is that a previous study indicated that tolling just the motorways (which is, on the face of it,  attractive because it is technically easy to do, and Auckland's motorways comprise three major radial routes to the north, south and west which are significantly superior to parallel routes) would result in worsened congestion because of diversion of a lot of short trips onto local roads. 

Of course the biggest problem with any broad brush surveys or studies is that it doesn't have the level of granularity required (or feasible) to address such problems.  For example, it would be easy to reintroduce tolls on Auckland Harbour Bridge, as the alternative route is lengthy, but tolling a short stretch of motorway where the parallel local route is already congested is likely to be problematic.

The obvious solution would be to selectively toll on ramps where there is less likely to be diversion, but that will raise a whole host of concerns of discrimination against certain suburbs.

Conclusion

Auckland wont get road pricing on existing roads in the near future.  The current government is uninterested in taking such a step for fear of it costing it politically, particularly when it is not politically aligned to the Auckland Mayor, nor supportive of his totemic underground rail link project.   Conversely, it is embarking on a massive road building programme that includes completion of a major southwestern motorway route in Auckland, and other large motorway projects in or approaching major cities, funded from existing motoring taxes.  It is two years till the next General Election, and even if the government changed, the Labour Party's opposition to congestion charging doesn't bode well for its future in Auckland for now - a more likely outcome is that transport funding would shift towards public transport away from large motorway projects, but still be funded from existing motoring taxes.

Regardless of that, neither the new motorway nor rail improvements will make a significant difference to congestion in Auckland in the long run - that will require pricing.  The problem is that the level of debate and discourse about road pricing in this context remains basic.  As I said before, the lowest risk platform to advance road pricing in New Zealand is its existing weight/distance based road user charge that applies to heavy vehicles and diesel vehicles.  A long term strategy to replace fuel tax with that system for all vehicles would deliver a platform that could allow Auckland's roads to be priced effectively and efficiently.

Thursday, 9 August 2012

News briefs: Australia, Florida, Mexico, UK, Virginia

Australian Federal Opposition suggests more tolls

Australia's Federal Shadow Treasurer (Opposition Finance spokesman) Joe Hockey (LIberal Party) has suggested to the Western Australian State Government that it should consider tolling, pointing out how successful it has been in New South Wales.  According to the Australian Broadcasting Corporation he said:

"From a federal government perspective there is limited money available for infrastructure"

implying that states that adopt tolling are more likely to be considered sympathetically for future funds compared to those that do not, presumably because tolling states have shown greater willingness to get motorists to pay directly for their infrastructure.

Both major parties in Western Australia continue to oppose tolls, but how long they can do so is questionable.  There are no toll roads in Western Australia, but there is a growing number of major highways around Sydney, Melbourne and Brisbane with tolls.  Given much of Australia's highway infrastructure is partially funded from the Federal Goverment paid for by fuel taxes, the inevitable question will be whether states which don't seek to recover whatever they can from tolls should be entitled to the same share of revenue from that tax.

Brisbane's new toll road impresses - but it's free for now

Finally, Brisbane's long awaited AirportLink toll road is opened and media reports indicate that motorists are impressed with the time savings it offers.  That bodes well, the more that try it out for free, the more who will think it is worth paying for, so the owners are hoping.  I profiled the road before, noting that the first month it will be completely toll free, and the subsequent two months it will also be free but users will need to have signed up for an account.  After that, tolls will increase sharply in 6 monthly intervals.   Time will tell if this strategy works.  I suspect it will at first, but such rapid inflation in pricing will put people off too soon, and it may be wiser to wait for a year before making such significant price hikes.   Curiously one report states people queued for "hours" to be the first on the new road.  Does the prospect of a new toll road generate that much excitement and patience elsewhere?

Meanwhile the HeraldSun reports that Brisconnections is trying to avoid the mistakes made around the nearby Clem7 toll tunnel, by being friendlier towards customers with better signage and clarity around speed limits (there was a higher than average level of speed fines on Clem7, with some violators claiming they didn't know the speed limit).

Florida to study shifting toll tariffs towards congestion based pricing

TV station WFTV9 reports that in Florida "Taxpayers are funding a study that could help set even higher toll prices during peak hours on the Florida Turnpike, State Road 528 and State Road 417". ..

The Turnpike Authority received a $400,000 grant from the federal government to study the concept in Florida's three metropolitan areas including, Orlando, South Florida and Tampa. 

The reason for the study is to manage demand on sections that are too expensive to widen, but there is local concern about traffic diversion.  Presumably the study should also consider lowering tolls at off peak times to counteract peak tolls, that is assuming toll revenue is adequate to cover infrastructure costs.  No information about the proposed study is on the Florida Turnpike Authority website.

Mexico - Libramiento de Matehuala highway has steady growth in demand

Standard and Poors affirms the BBB debt rating on the Libramiento de Matehuala toll road in Mexico according to Reuters.  The road is a 14.2 km long toll highway between Mexico City and Monterrey which bypasses Matehuala, on the San Luis Potosi-Saltillo highway.

The report continues:

For the 12 months ended June 30, 2012, traffic increased 4.1% due to the stable economic conditions in the country. Also, revenues grew 9.6% because of higher traffic and tariffs in line with inflation, and a favorable traffic mix, with trucks making up almost 60% of the vehicles on the road. We expect traffic to grow at an average rate of 3% throughout the term of the debt, which reflects the road's vital trade link between Mexico and the U.S. as part of the NAFTA corridor.
The report claims it requires minimal maintenance given its construction is in hydraulic concrete.  Demand is highly dependent on commercial activity and it faces toll-free alternatives.  It has been open since 2004 and carries around 8,579 vehicles per day (low for a toll road).  Tariffs are listed here (in Spanish) ranging from US$1.45 for a car to US$7.24 for the largest trucks.  The concession allows tariffs to be increased in line with inflation.

UK - Lukewarm reception for A14 toll idea

I wrote before about the UK Government's plans to help fund one of its largest highway projects with help from tolling.  It would be fair to say that enthusiasm for tolling is weak at best.  Local newspaper Peterborough Today reports that local businesses are concerned about tolling increasing their costs or that motorists will avoid the tolled route increasing traffic on local roads.   The local Chamber of Commerce head says it might be a "necessary evil".  Clearly there is a lot of work to do to convince people that accelerating a long delayed road project is better than not doing anything at all, but more importantly that the tolling plan envisaged wont make traffic worse.  The key will be to demonstrate that people can either choose to drive the existing route (in one form or another) untolled or have an improved route that is tolled.   Meanwhile, anti-road lobbyists the "Campaign for Better Transport" and "Sustrans" are opposed, because they don't believe in major highway improvements at all - suggesting rail freight improvements would be preferable and that building a toll road will induce additional demand.  It would seem that using pricing to manage demand is considered unacceptable if it means new capacity is funded by it.

Virginia - Dulles Greenway credit rating maintained

Owner of the Dulles Greenway, Toll Road Investors Partnership II, has had its credit rating of BBB- confirmed by Fitch according to Reuters.  TRIP II is 50% owned by Macquarie Atlas Roads.


Key points reported about the toll road (which is just over 20km long from the end of the Dulles Toll Road to the Leesburg Bypass in Virginia):
- From 2013 through to 2020 tolls can escalate annually at the highest of (i) CPI + 1% (ii) Real GDP, or (iii) 2.8% per annum;
- Year on year traffic increased 1.8% by May 2012, but tolls had increased by 6.7% in January 2012 resulting in a 10% increase in revenue year on year;
- This is only starting to offset a year on year decline in traffic since 2005, due to a combination of the economic situation and improvements to parallel routes.