News briefs - Indonesia, Philippines, South Africa, USA

Indonesia - Citra Marga Nusaphala Persada building more toll roads

The Jakarta Globe reports that Citra Marga Nusaphala Persada, the privately owned infrastructure firm, is planning to spend around US$200 million (Rp.2 trillion) on new projects.  It has a 62.5% share of a a 22.8-kilometer toll road, connecting Antasari, in South Jakarta, and Depok in West Java.

Philippines - Call to scrap VAT on tolls and subsidies for private toll roads

Business Mirror reports that Senator Ralph Recto has called for an end to the 12% VAT on tolls to ameliorate expected increases in tolls.  He suggests this would be preferable than plans to subsidise more toll roads to encourage private sector investment.  At present toll road operators have to apply for increases in tolls from the Toll Regulatory Board and are expecting to increase tolls by 10-33% this year.  His view is that if toll road operators could price the roads to generate a return that they could fully recover, the need for subsidies could be avoided.

South Africa - SANRAL CEO calls for acceptance of court decision

Engineering News reports that the South African National Roads Agency Ltd. Chief Executive, Nazir Alli, has called for opponents to tolling to "accept" the decision by the Constitutional Court to set aside the "interim interdict" granted to the Opposition to Urban Tolling Alliance (a lobby group opposed to tolling urban roads in the country), stopping tolls on the Gauteng Freeway Improvement Project (GFIP).

He said that without tolls, there wouldn't be the money to pay for major road improvements and claimed that the money for roads would need to involve cutting subsidies to public transport instead.   He claimed that government did not have enough money to pay for building and upgrading all of the roads required, and that much of South Africa's roads are not tolled.

USA- New York  - Could New York introduce congestion pricing more readily now?

Keystone politics points out that Manhatten now, effectively, has a cordon of automatic number plate recognition cameras, on all bridges, run by the NYPD.  So, perhaps, the costs of congestion pricing may be slightly less than otherwise thought?

USA - Texas - Groups urge boycott of USA's fastest toll road

Texas SH130 is now the USA's fastest road with a speed limit of 85mph, but the website of TV station KXAN reports that groups "Texans Uniting for Reform and Freedom" (TURF) and "Texans for Accountable Government" (TAG) are urging motorists to boycott the road.

Opposition appears to be based on:

- Safety fears at the high speed limit;

- Little efforts taken to avoid feral hogs from being a collision risk;

- Xenophobia (because the road is owned by Cintra, which is of course Spanish).

TURF is a contradictory organisation, that is opposed to tolls because roads "should be free".  It claims to "work tirelessly to secure a pro-freedom, pro-taxpayer, fiscally solvent, freely-accessible public road policy".  Quite how making taxpayers pay for roads they don't use, and opposing user pays is pro-freedom and pro-taxpayer, is rather curious.  Indeed forcing taxpayers to pay for something they don't use is quite socialist, opposing privately owned roads is as well.   I can empathise with concerns around eminent domain and improving the quality of government spending, but opposing Cintra because it is foreign is simply mindless nationalism.  Should foreigners stop buying goods and services produced by Texan firms?

TAG has a broader political focus saying it is "dedicated to safe guarding individual liberty, protecting personal privacy and property rights, election integrity, safe water, and electing representatives, not bureaucrats, to office", but it was far from easy to find anything on tolls on its website.

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.

Ratings news: LBJ Express, Madrid-Toledo, SANRAL, North Carolina Turnpike Authority, Manila

Note:  Apologies some of these have been delayed a couple of months as it was a draft article I forgot to post.

LBJ Express Lanes - Texas

Fitch Ratings affirms LBJ Infrastructure Group’s infrastructure bonds issued in 2010 at 'BBB- The bonds were issued to finance the LBJ Express lanes project in Texas.

Key comments are:

- Strategic location of the project “located in a highly congested area north of Dallas and near the Dallas-Fort Worth International Airport. The solid economics of the service area have benefited from considerable population and employment growth over the last decade” 

- Pricing flexibility will be retained to competitively price tolls against the demonstrated congestion which exists at peaks, interpeak and in weekends in both directions. 

- However, managed lanes do bring considerable uncertainty around revenue, given free parallel lanes and the sensitivity of demand with economic conditions. 

The LBJ freeway (IH-635) project is currently in the second year of a five-year construction period. The construction project upon completion will include an eight-lane general purpose freeway, a four- to six-lane managed lane facility, and a continuous two- to three-lane frontage road system with access ramps. As of March 2012, the total value of work completed for design and construction is $494.9 million, approximately 23.9% of the $2,074 million total project cost. Construction activities in the first quarter of 2012 included roadway demolition, utilities, earthwork, structures, and noise walls.

New express lanes will always carry considerable risk, based on demand for existing untolled capacity.

AP-41 Madrid-Toledo, Spain

Bloomberg reports that the highway between Madrid and Toledo, which is managed by companies including Grupo Isolux Corsan SA, Comsa SA, Azvi and Banco Espiritu Santo SA, has declared itself bankrupt at the Albacete court. The AP-41 toll road has over 500 million euros (US$646 million) of debt. It has faced financial ruin due to the collapse of the Spanish economy, as demand has dropped well below forecasts.

The road's profile is summarised below:

The new Madrid-Toledo (AP-41) toll road makes it possible to travel comfortably and safely from the Spanish capital to the imperial City, declared a World Heritage Site by UNESCO, in approximately 30 minutes. The 71.5 kilometre-long motorway, which passes by some of the most interesting and historical towns in the Community of Madrid and Province of Toledo, has new interchanges and a service area. This is a modern, fast alternative to the current A42 motorway, providing a trip without traffic back-ups and at a low cost. 

It's certainly without congestion, as it is following the news last year about the Alicante ring road's lack of demand.  Of course, the bankrupt road will continue to operate with tolls, with the creditors receiving the revenue.  However, given Spain's overall banking crisis, it would appear that this road will simply be another bad asset for some time, until its value is substantively written down.

SANRAL, South Africa

BusinessTech reports:

Moody's reduced the credit rating of the South African National Roads Authority Ltd following the North Gauteng High Court’s decision on 28 April 2012 to block the implementation of electronic tolling on the country’s largest toll road, the Gauteng Freeway Improvement Project (GFIP), pending a final court resolution on the matter.

The road agency’s global scale, local and foreign currency issuer ratings have been downgraded to Baa2/P-3 from Baa1/P-2, and the South African national scale issuer ratings has been downgraded to A2.za/P-2.za from Aa3.za/P-1.za.

More recently, the government agreed on a significant reduction in e-toll rates, in return for which the authorities extended a R5.8 billion budget allocation. Thus far, the delayed implementation of e-tolls has resulted in revenue losses of approximately R2.7 billion for SANRAL, which is a sizable 40% of its estimated 2012 annual budget.

These losses will grow by an estimated R100 million each month that the delay continues and will gradually erode the company’s cash buffer.

It has since reported that Sanral will experience significant financial pressure post October 2013 in the event that e-toll revenues are still not earned by the entity

Tolling the Gauteng project is now subject to court proceedings which are underway based on challenging the legality of using fully electronic free flow tolling.

For SANRAL's sake, it can only hope that the case is dismissed and it can get on with introducing tolls on the upgraded highways, but if it fails then South Africa may well need to look at a new approach to tolling and taxation of motor vehicles.

North Carolina Turnpike Authority

Marketwatch reports that "Fitch Ratings affirms the 'BBB-' rating on the North Carolina Turnpike Authority's (NCTA) approximately $294.5 million Triangle Expressway System senior lien revenue bond"

The Triangle Expressway will serve as a major alternative to congested free roads and as a key route to the main employment center in the region, the Research Triangle Park (RTP). Solid historical county and corridor population and employment growth is expected to continue and should support assumed traffic growth rates. 

Low Initial Toll Rates and NCDOT Planned Annual Increases: There exists the potential for lower traffic and revenue given uncertainty with perceived value of time savings and potential sensitivity to toll rates given the limited number of toll roads in the area. In Fitch's opinion the road has moderate economic ratemaking flexibility given higher-than-average wealth levels and a 2013 toll of approximately $0.15/mile. 

Significant state support for the project will be in the form of a $25 million annual payment from the state of North Carolina, which will support debt-service payments, after paying debt service on state appropriation bonds (rated 'AA?' by Fitch) (largely on the back-end of the toll revenue /TIFIA loan debt amortization), a construction assurance agreement, an operations and maintenance guaranty agreement, and a guarantee on the renewal and replacement reserve.

The Triangle Expressway will be an all-electronic road payable by either a transponder or video toll. A video will take a picture of a license plate and a bill is mailed to the driver. The NCTA currently has a tolling policy associated with the road. Two toll rates will be set: one for transponders and one for video tolling. The rates will differ across vehicle type. Initial toll rates are estimated to be around $0.15 per mile (2013 dollars). Given wealth levels of the greater Raleigh-Durham MSA and potential time savings, Fitch views the rates as reasonable. Should traffic levels not materialize as expected, Fitch believes there is some, albeit limited, flexibility to increase rates.

Manila Cavite Toll Road Finance Co

According to Reuters:  On May 22, 2012, Standard & Poor's Rating Services lowered its rating on the outstanding US$15.06 million Series 2010-1 notes (due 2022) issued by Manila Cavite Toll Road Finance Co. (MCTFC) to 'CCC' from 'CCC+'

Key points:

- the traffic of 11,000-11,500 vehicles a day on the extension road continued to be below the expectation of closer to 20,000 vehicles a day by the end of first quarter 2012.
- We believe traffic on the existing road is already reaching historical steady levels of 76,000-77,000 vehicles per day, and that traffic on the extension road is not likely to drop below its existing level of about 11,000 vehicles per day. However, it is the delay in the traffic ramp-up on the extension road that continues to hurt the project's performance. We believe traffic growth on the extension road has been affected by factors such as its relatively high toll rate, higher fuel prices, lack of awareness among potential road users, and road users getting comfortable with alternate routes.
 

News briefs - France, Nigeria, Philippines, UK, Macquaries

France

Romania Insider reports that two Romanian truck drivers, contracted to Spanish company Giraud Iberico, (which itself is a subsidiary of French company Geodis, which is owned by SNCF (the French state owned rail operator)) are subject to legal action for toll fraud on French toll roads owned by concessionaire Vinci.  The drivers claimed they were under pressure to keep rates low, and it is alleged they were "leaving tickets with low tariffs at an olive tree next to a lay-by for other drivers to pick up".  The roads appear on motorways linking France with Spain.  The toll system is a closed toll system whereby tickets are issued to motorists at toll booths entering a motorway, and used to determine distance travelled and tariff at exiting toll booths.   The claim is that 1.25 million Euro (US$1.55 million) was evaded.

Nigeria

Congestion at toll plazas on the Lekki-Epe expressway (Lagos) is causing enormous frustration according to This Day Live. Delays are in part due to sheer volumes of people paying by cash and issues with the reliability of payment systems. Although there are electronic toll options (with a conventional DSRC tag system that allows free flow through barrier gates) one problem noted is that:

"of the five lanes on both sides, road-users revealed that those that opt for cash payments to purchase their tickets are allocated only two lanes, whereas three lanes are dedicated to those using the electronic payment option. They contended that since the majority of those plying the route use cash, LCC (Lekki Concession Company) should have dedicated more toll points to this category of road users"

Although no statistics is available yet on the number of vehicles plying the revamped Lekki-Epe Expressway and the figure for users of the toll plaza, over one million vehicles are believed to ply Lagos roads every day with about 500,000 of that number commuting between the Lagos Mainland and Lagos Island on a daily basis.

The obvious answer is to have a serious price incentive to move to the free flow electronic option, so that people make the transition, and to ensure that there isn't such a delay that it block people using that option from using the road.  If people are reluctant, make sure it can be prepaid and that it is tailored to be attractive to a greater proportion of users.

Lekke-Epe Expressway

Philippines

According to the Inquirer (Philippines) the Filipino Government is considering privatising the 30-kilometer Kennon Road which is operated today as a toll road by the Department of Public Works and Highways (DPWH).

Public Works Secretary Rogelio Singson said that the government is thinking of privatising the road to improve its maintenance and the riding comfort of motorists and commuters.

“We are looking at the best option for the government to improve the maintenance and riding comfort for Kennon road because there is an alternative non-toll road,” Singson said. “If you don’t want to pay a toll fee, you could take Marcos Highway.” 

It also plans to connect Kennon Road to the ongoing Tarlac-Pangasinan-La Union Expressway, to reduce travel time from Metro Manila to Baguio City from the current six to seven hours to three to four hours. The big fear among locals is that the price will go up too much, so options to exempt residents are being considered.

Kennon Road (in red)

UK

The London Evening Standard reports that the UK government is increasing tolls on its lucrative Dartford Crossing from October 2012 by 50p for most vehicles, except HGVs which will pay £1.30 more.  The reason?  To "pay for" conversion to fully electronic free flow operation.

I think this move is foolish and inequitable.  Why?  Well nobody should be "paying for electronic free flow" until it is up and running.  The appropriate step would be to borrow the necessary funds and have the people benefiting from free flow pay sufficient to pay back the debts over the depreciate life of the asset.  Pay As You Go is not how the government funds most capital, it shouldn't be how it funds this.

Secondly, let's not pretend that this increase will be dropped when the system is "paid for".  It wont be, and by linking the increase to that it creates a false impression that this is what should happen.

Thirdly, the whole point of freeflow is to generate both economic benefits from reduced congestion and savings in operations.  Charging people more counteracts those benefits, especially since net revenue from the Crossing is now surplus to the capital spent on the crossings (debt has been paid off) and the ongoing maintenance and operating costs.

There is to be another increase two years after that, but that doesn't have a justification.  It could be inflation, but the ineptness in communication shows up exactly what has been wrong with the political and  bureaucratic handling of road charging in the UK for the past 15 years.  Motorists think they are treated as cash cows to be milked on demand.  This step simply proves that this is exactly what Treasury thinks and the government is unwilling to take an alternative approach.

A far more strategic view of lessening the toxic noise around tolls would be to pay for the upgrade without an increase, by a combination of:
- Acknowledging the surpluses generated by toll users over recent years, and seeing this as a way of giving them back something because of the inertia in moving the toll system onto modern technology;
- Having new prices after the conversion that reward those with accounts, and charge more those who are occasional users;
- Charge peak tolls to manage congestion and significant off peak discounts.

In other words, actually let the price mechanism deliver optimised revenue when the system itself is optimised.  Let people pay more when they have improved service, not before and charge the most those who cost the system the most in how they interact with it.

Why does the UK government insist on treating motorists in a manner that sees them treat the tolls with utter contempt?

Macquarie Atlas Roads

Nine MSN reports that Peter Trent, Chief Executive of Macquarie Atlas Roads expects that revenue from the company's main asset the APRR motorway network, a 2,264km road linking Paris and Lyon in France, would be higher in 2012 than 2011. It was also expected that more motorists in the US would take to Macquarie's toll roads in Chicago and Virginia despite a slightly negative first quarter.

However, Macquarie does not expect to see an improvement in the low volume of traffic on its British M6 toll road, a major bypass north east of Birmingham. Chairman David Walsh flagged the company may consider selling the M6, but said there were currently no plans to do so.

Manila can support two competing toll roads?

Business Mirror Philippines has an interesting report that, with maps, shows the scale of potential in a developing market for new tolled routes with anticipated growing demand: 

METRO Pacific Tollways Corp. (MPTC), operator of North Luzon Expressway (NLEx), believes that Metro Manila is big enough to support two planned connector toll road projects linking the northern and southern toll gateways to help ease traffic conditions.

MPTC President Ramoncito Fernandez countered concerns that the P35-billion toll road project had become less feasible following the government’s unexpected decision to approve both its proposal and that of rival San Miguel Corp. (SMC) and partner Citra Metro Manila Tollways Corp. of Indonesia, which use a different alignment.

While Fernandez conceded that the original assumption was for only a single connector road to operate—in this case a 13.2-kilometer elevated road over the Philippine National Railway tracks —he said MPTC and SMC will be serving different markets.

“Since [our project] is connected to the harbor it serves more the logistics part of the business plus the people who travel from north and south and vice versa. [SMC’s] market, from what I understand, will be local travelers,” Fernandez told reporters at the sidelines of the Institute of Corporate Director’s 9th annual dinner in Makati City on Wednesday.

“We believe the country can afford two [Metro Manila] connector roads,” Fernandez said.

He said customers might overlap “but not enough to say that one will fail because of the other.”

MPTC’s connector road will effectively link South Luzon Expressway (SLEx), recently acquired by the San Miguel-Citra partnership, with NLEx as well as MPTC’s harbor link project.

The SMC-Citra connector road is a 14.2-km elevated tollway that will also connect SLEx with NLEx. The project, an extension of Citra’s Skyway project, which currently ends in Makati City, will reportedly run parallel to Metro Manila’ main highway, Epifanio de los Santos Avenue.

While tracing independent alignments for the most part, the two projects will share a common 3-km route, which would be jointly built by MPIC and San Miguel-Citra, Transportation Secretary Manuel Roxas said last week. 

MPTC's proposal in blue, SMC Citra's in red. Black is NLEx and SLEx

 Fernandez said he expects MPTC to be awarded the project by year-end following a competitive or “Swiss” challenge. Completion is expected by 2015, the company earlier said.

The proposal by San Miguel-Citra, meanwhile, will not be subject to any competitive challenge. Roxas explained earlier that MPTC’s project is considered an unsolicited bid while that of San Miguel and Citra already has an existing franchise to build as part of the Skyway extension.

As you can see above with my depiction, the overlap is in the south, which will be interesting (will there be parallel or stacked highways?).  The blue proposal essentially would be built on top of an existing rail corridor, the red proposal mostly above an existing wide boulevard.  These, combined with the Epifanio de los Santos Avenue ring road, will mean there are effectively three bypass routes across Manila.  Traffic volumes are probably likely to support the two new ones given scope for more after this construction binge will probably be zero without tunnelling. I don't doubt that given the state of traffic in Manila, that these roads will get well used, but the point at which Manila is "built out" in terms of it being too expensive to acquire land or corridors for more roads would appear to be getting closer.  These roads are being built on top of existing railways and roads.  Tolls will mean demand can be managed to hopefully ensure the roads remain free flowing.  However, the obvious question will come, perhaps in 10-15 years time, as to whether Manila will need some form of congestion charging , as a more efficient alternative to building a fourth new highway corridor around or across the city.  Meanwhile, tolls and private investment are enabling the city to build out highway infrastructure to try to cope with its growth.

News briefs: France, Philippines, Romania

France

A press release from Kapsch reports that the company has won a contract to supply on board units for French heavy vehicle "ecotaxe" system for more than 25 million Euros.  Kapsch is known for its experience with DSRC (tag and beacon) tolls in Austria, the Czech Republic and elsewhere.  Now it has moved into the GNSS (GPS) domain of tolls involving distance measurement.  I remember a few years ago a rather inane debate at a conference between a Kapsch representative (arguing against GNSS tolling) and a Toll Collect representative arguing about the "best technology", when the real answer is "depends on what you are doing and where you are doing it".  It is good to see that Kapsch is no longer beholden to DSRC alone.

This puts the Austrian Kapsch in the centre of French heavy vehicle tolls, and provides a platform to build a wider business in satellite enabled tolling, without roadside gantries to measure distance.

Philippines

Manila Bulletin reports that private infrastructure investment firm, Citra Metro Manila Tollways Corp, has proposed a 14 km elevated toll road from Buendia in Makati City to Balintawak in Quezon City in metropolitan Manila. It would be six lanes and is called the SMC-Citra alignment.

Predicted travel time savings are over an hour at peak time, as the current journey time on surface streets can be up to 1.5 hours. The cost is estimated at US$594 million, and is expected to be a fully commercial toll road (entirely funded from tolls).

Romania

Romania Business Insider reports that Romania's 2011-2020 National Road Safety Strategy happens to mention inclusion of a "congestion tax", reflecting the Energy Strategy for the Bucharest Municipality.  The report also notes that Romania had an 86.4% increase in newly registered cars in the month of January 2012 compared to the same month in 2011, meaning Romanians are buying new cars in increasing numbers.  Now this report doesn't say when or how congestion charging might be introduced in Bucharest, yet it is notable that growth in car ownership and traffic in this former totalitarian state is giving rise to consideration of the need for demand management measures to address congestion and pollution.

News briefs: Ohio, San Diego, Stockholm, Philippines, South Africa, congestion charging helping car pooling

Ohio

Bloomberg Business Week has a good article reviewing the issues around the leasing of the Ohio Turnpike.  Some points include:

-  $600 million of any lease would be used to pay back turnpike bonds issued by the state;

-  Former Governor Ed Rendell (Democrat) said that "The bid for the 545-mile Pennsylvania Turnpike by Abertis and Citi Infrastructure Investors died because the Legislature didn’t want to lose patronage jobs at the Turnpike Commission...But could they get a good deal? I think probably yes"

- Ohio Turnpike collected $232.2 million of toll revenue in 2010;

- Fitch has a negative outlook on the debt, based in part on the need to replace the road’s original concrete base, “a project that could possibly result in significant capital or debt needs in future years that are beyond current expectations";

-  Ohio expects a lease term of about 40 years, compared with Indiana’s 75-year deal and Chicago’s 99-year agreement...It also would retain a percentage of the toll revenue over time, even if that reduces the upfront payment" said said Jerry Wray, director of the state transportation department.

- "it’s unlikely Ohio would get offers comparable to what was received by Indiana, Pennsylvania and Chicago’s $1.8 billion lease of its Skyway in 2005 because they were highly leveraged deals with an expectation of economic growth that didn’t materialize"

On balance, it still looks like a potentially good deal can be gained for Ohio, but key to all of this is price and ensuring the road is kept in a good condition throughout the life of the lease.

San Diego

Sign On San Diego has an editorial commending the "nationalisation" of the South Bay Expressway.  It says:

- "Jerome Stocks, chairman of the SANDAG board, says the agency may only have to come up with about $245 million of the purchase price because the remaining $100 million or so is owed to the federal government";

- "Purchase of the road would likely obviate the need to add four express lanes to Interstate 805 south of SR-54, scheduled for around 2030 and estimated to cost nearly $700 million, making more money available for other regional projects";

- "As a government agency, SANDAG would have no multimillion-dollar property tax bill to cover, it already has the employees to operate the toll road, and SANDAG would be looking only to maximize the movement of people and goods, while a private operator would be looking to maximize profit".

SANDAG surely has to factor in not receiving property tax revenue as well as not making the same money from the toll road.  The key public policy benefit must be in deferring other works, yet if they were tolled as well, would the case for the buy back still stack up?

Stockholm

Norwegian tolling equipment supplier QFree has won the contract to continue servicing and maintaining the Stockholm congestion charging infrastructure that it originally installed. The contract is only for 1 year started 1 January 2012 at a value of US$2.9 million.

Philippines

The Manila Standard reports that the Supreme Court of the Philippines has confirmed that toll operators must charge VAT of 12% on their tolls.  They have been resisting this on the basis that it is not akin to a "service", but of course because putting up the price will reduce demand (and revenue).

South Africa

Comments from the South African Transport Minister and the Energy Minister indicate a firm commitment by the government there to tolling. IOL News reports that Transport Minister Sibusiso Ndebele said "If there is an outcry and people say they won't pay tolls, then we can't put the freeway in...Freeways are not free." and Energy Minister Dipuo Peters said: “Those rejecting the tolls were the worst of people who spent their money on comforts and not on essential services such as electricity...People buy cellphones, they pay for airtime, but when it comes to water, electricity and transport, people complain about the user-pays principle, knowing quite well that we need resources to maintain and operate this infrastructure.” That was in response to dismay expressed by COSATU - the Congress of South African Trade Unions - which opposes the tolls as an imposition on car commuters who have "no other choice".

Car pooling

The New Zealand Herald reports comments by Ridesharing Institute spokesman Paul Minnett claiming that congestion charging could support growth in car pooling. Given the propensity of so many authorities to promote car sharing through HOV lanes, it is welcome to see someone note that road pricing is likely to be highly effective in promoting car pooling, without segregating special lanes for that traffic.

Philippine government pushing more toll roads and VAT on tolls

Reuters reports that the Filipino government is seeking bids for a US$37 million DBFO toll road project called the Daang Hari-SLEX toll road that will link southern Cavite province to the South Luzon Expressway. Interest is expected from local firms such as San Miguel Corp , Metro Pacific Investments Corp , Ayala Corporation and JG Summit Holdings. Deadline for bids is 19 September 2011. Details on the road are here.

However, this is only one of three major highway projects expected to be put out to tender this year. The other projects are the NAIA Expressway Phase 2 project (NAIAX) and the NLEX-SLEX connector road. According to broadcaster ABS-CBN, “PPP Center Executive Director Phil Torio said the bidding process for NAIAX and the NLEX-SLEX connector may be started this year but there may not be time for final bids”.

In addition, Trade Undersecretary Cristino Panlilio said “ It also plans to push for raising the foreign ownership limit to 60 percent, or remove the limit entirely”. This will improve the attractiveness of Filipino toll roads for foreign investors able to have a controlling stake. It has been government policy for some time for major highways in the Philippines to be tolled PPP concessions, and so there are certainly some opportunities for investors, although many of these may be around enhancing operations. The risks of such investments need to be considered as well of course.

Meanwhile, the Philippine Daily Inquirer reports that Filipino toll operators are awaiting the outcome of a Supreme Court case that could force them all to impose a 12% Value Added Tax on toll charges. They have been opposing it, but the government insists that it needs the additional revenue and that tolls are a payment for a service.

Short items on the Philippines, El Paso and York

Philippines to build more toll roads

Agence-France Presse reports that Filipino President, Benigno Aquino wants the private sector to build three new major toll highways in the country. He listed them as:

- A link between North Luzon and South Luzon highways in Manila;

- Manila airport highway; and

- New access route to South Luzon tollway.

Of course the key problem faced by the Philippines is with congestion at toll booths near Manila.  Longer term it may want to relieve the congestion on parallel routes, but for now tolls are an effective way to help fund a major expansion of infrastructure.

El Paso to build new lanes as HOT lanes

The El Paso Times reports that El Paso County, Texas is intending to build HOT lanes parallel to the Border Highway.  It involves the construction of two new toll lanes, one in each direction, and an upgrade of the highway's four existing lanes, about 8.7 miles from U.S. 54 to Zaragoza Road.  The cost is estimated at US$80.2 million, with state bonds paying US$74 million and federal funds another US$6.2 million with the project expected to be completed in 2013.  No new land will be needed to build the extra lanes. What isn't clear is whether the revenue will be used to pay back the bonds, or be "free revenue" for the County, as it is claimed the "revenues raised here will stay in the region".   Nice deal for the County it would appear. The intention is that the lanes be fully electronic free flow and have peak and off peak charges.

A previous El Paso Times poll showed that most people did not plan to use the toll lanes, but motorists will have the option of using the express toll road or the non-toll part of the road.

It was also recommended that the toll lanes revert to non-toll lanes if the project does not pay for itself by 2028.  The proposed toll would be a base of US$0.10 per miles off peak US$0.13 per mile peak.

York rejects congestion charge

The Yorkshire Post reports that York Council has expressly rejected congestion charging for its Local Transport Plan. Executive Member for City Strategy, Steve Galloway said:

“The present council is very much opposed to congestion charging. It would impact on the city’s key economic drivers in the tourism and retail sectors. “If the Government does introduce a road pricing system across the country, then things could change. But as things stand, we do not want to be in competition with other cities with people perceiving York as somewhere that is more expensive to visit".

However, I don't think that the small congestion charge in Durham has had a negative effect. After all, York could well have a system that is targeted for its needs on a scale not much different from Durham. However, given the debacle of the last government’s mishandling of the issue of road pricing, it is hardly surprising it is seen as a poison pill by British councils outside London.

News briefs on tolls Jan/Feb 2011

South Devon Link Road will not be tolled: According to ThisIsSouthDevon, the Torbay and Devon County Councils have decided to use higher local property taxes rather than tolls to progress the A380 South Devon Link Road, contrary to earlier reports that tolling was being considered.  An extra £20.5 million will be contributed, and the capital cost is being reduced by scaling down the project.  The rest of the cost is to be sought, again, from central government on the basis that it is a high value project with a far lower central government contribution.

Sale of shares in Portuguese toll road company: According to Reuters, "Spanish savings bank Nova Caixa Galicia said it had sold its entire 2 percent stake in toll road operator Brisa for 68.4 million euros ($93.37 million). Brisa's other shareholders include Spanish road operator Abertis, which holds 15.2 percent of its Portuguese counterpart and has said the stake is a financial holding. Abertis recently sold its 6.7 percent stake in Italian toll road operator Atlantia".  Given the recession in Portugal, I am not surprised at the desire to bail out of toll roads when demand in that economy is deeply depressed.  Toll roads on the Iberian peninsula are likely to be

Filipino toll road network continues to expand according to major concessionaire: ABS/CBN reports that Metro Pacific Tollways Corp (MPTC) will press ahead with Segments 9 and 10 of the North Luzon Expressway Phase 2 project.  Segment 9 will connect the McArthur Highway in Valenzuela all the way to Nlex while segment 10 will link the same highway to Port Area in Manila. The cost will be 10 billion Filipino peso (US$229 million).

The two projects span 8.5 kilometers. Segment 9 aims to ease access to McArthur Highway, the old route to central and northern Luzon while Segment 10 will dramatically speed up the transport of goods to and from Manila’s North Harbor.

MPTC controls the concession to the 84-kilometer (km) Nlex and holds the contract to operate and maintain the 94-km Subic-Clark-Tarlac Expressway.

Tolling has been a key source of funding of the Filipino highway network and there appears to be little let up in the appetite for, and viability of new toll roads in the Philippines.

Manila Skyway toll restructure: Manila's major urban elevated highway, the Skyway toll road is to get its toll schedule restructured to better reflect distance travelled on its segments.  The Philippine Daily Inquirer reports that the concessionaire, Citra Metro Manila Tollways Corp, will be increasing some and reducing other tolls on the route. Last year, the company opened a new three-kilometer section of Skyway from Bicutan to Sucat. Motorists have been allowed to use the new section for free up till now.

Road pricing news briefs, UK, Philippines, Uganda, USA

UK

Accountancy firm promoting postponed new bypass to be built as toll road in South Devon.  The A380 South Devon Link Road project is a project of the Devon County Council and Torbay Council, and recently had funding refused by the UK government as part of its austerity programme to eliminate the structural budget deficit by 2015.   The project is a 5km 4-lane highway (dual carriageway) between Penn Inn and the Torbay Ring Road at Kerswell Gardens and would cost about £130 million.  The project has a benefit/cost ratio of over 10:1.  Now no serious investigation has been undertaken of the tolling potential, but I am fairly likely that it wont be enough to toll it on its own, but it could contribute a portion of the cost.   Local authorities would contribute up to £33 million, and were seeking a central government contribution for the rest.

Whilst I wouldn't hold my breath for this being a toll road, it does show how lack of conventional funding starts to stretch imaginations for ways to directly charge road users for new routes that they are likely to see benefiting them.

Philippines

French toll operations company, EGIS, gets an article in the Philippines Daily Inquirer about its activities on Filipino toll roads that isn't far short of an advertisement.

Uganda

The Kampala-Entebbe toll road project is a scandal already because of cost overruns on construction, although at US$350 million for 54 km it might be expensive for Uganda, but not by world standards.  Not that many are too worried as it is a Chinese financed and built project which is hoped will be repaid by tolls.  The interesting point in the article by Uganda's Daily Monitor, is the charging technology.  The intention is to embed chips (DSRC style) into Ugandan number plates to make it easier to charge, with monthly bills.  I hope that issues such as accuracy of databases, payment outlets and options are adequately addressed, given how rare electronic free flow tolling is in Africa because of such matters.

USA

Bankrupt California toll road likely to be sold by creditors, as San Diego's South Bay Expressway is expected to come out of bankruptcy protection.  The route has US$510 million of debt, and has performed poorly because of demand not meeting forecasts during the recession.   Demand is a third of projections, and tolls have barely kept pace with debt servicing costs.  SignonSanDiego debates the positives and negatives of a government buy out, given the government gets the road for free eventually when the concession expires in 2042.

Filipino push for interoperable electronic free flow tolling

Tito F. Hermoso in Business World Online argues that the Filipino government should put a little impetus into encouraging private concessionaires across the Philippines to established a transactions clearing house.   Why?  Because he believes the building blocks are already in place to establish a fully interoperable electronic free flow based tolling system across Filipino toll roads.

The Philippines has built an expressway network between major cities using private concessionaires with tolls, including using the European 5.8GHz standard for DSRC (Dedicated Short Range Communications) technology.  However, whilst that means the tags that motorists acquire for different toll roads can be read at all of the roads, the key is to have the systems behind the different toll roads operators communicating behind the scenes so that payment is seamless.   What is far more important is contractual interoperability, which is good for users, but not necessarily always seen as so by concessionaires.

In short, what Mr Hermoso is rightly calling for is for motorists to have one account with one concessionaire that enables the motorist to use toll roads from other concessionaires and for the account to be deducted for those roads as well.   This is the holy grail of interoperability, an objective of many national or state/regional transport authorities in different countries, but often not achieved either for technical or contractual reasons.  

Of course there should be adequate incentives for concessionaires to do this.  It is cheaper to have such accounts, and they would encourage usage of the toll roads.   However, it does depend on the number of transactions from account holders from different concessionaires making it worthwhile to handle the accounts.  A central clearing house makes all the difference, but the precedents in the tolling world are not as common as one might think. 

What he also suggests is that barriers be removed and for electronic tolling to be free flow, which of course requires high quality ANPR (Automatic Number Plate Recognition) systems, but more importantly clear number plates and an accurate motor vehicle licence plate registry.   I can't say that I am sure the Philippines is ready for that yet, but the aspiration is certainly laudable as one of the big negatives of tolling is the use of manual toll booths which can contribute to congested. 

Growth in toll roads in the Philippines

Manila Bulletin reports that the Philippines will see a major expansion in toll roads and PPP highways as the country continues to improve its infrastructure.

Ramoncito S. Fernandez, president and CEO of Metro Pacific Tollways Corporation (MPTC).  MPTC is the holding company that has under its wing the Manila North Tollways Corporation (MNTC), the builder and concessionaire of the North Luzon Expressway, and the Tollways Management Corporation (TMC), the operations and maintenance (O&M) operator of both the NLEx and the Subic-Clark-Tarlac Expressway.  

A range of new toll road projects are expected including the 13.2km North Luzon-South Luzon Connector, but there are also light rail projects expected to attract PPP investments.

Yet again a developing country sees merit in using private capital to build and run highways and to charge directly for use, funny how so many developed countries find this a big challenge.