Wednesday 10 February 2016

Croatia considering introducing vignettes

Croatia is the newest EU Member State and as a result now has greater trade (and movement of people - notwithstanding the migrant/refugee crisis) with its neighbouring EU Member States Slovenia, Hungary and beyond.  Main highways in Croatia are managed commercially by a state owned enterprise called Croatian Motorways

Croatian Motorways charges tolls on its roads both through manual and electronic means, with both open (pay once) and closed (ticket collected at start and paid for at the end) systems in place. Electronic tag accounts get a discount of 21.74% on manual toll rates (rising to 33.48% between 1 November and 31 March).  Tolls vary by individual road and appear to reflect differing infrastructure costs.  An interactive map of the network is here.

However, according to Croatian news website Vecernji (Hat Tip: Ptolemus) the newly elected centre-right coalition government includes the Croatian Social Liberal Party which opposes more PPP concessions, so there is discussion about both increasing tolls and introducing vignettes (which presumably would apply to all other roads).   Croatia's problem comes down to growing debts for existing roads that need renegotiation and repayment.  

Neighbours Slovenia and Hungary both have vignettes for light vehicles on motorways/major highways, whereas Slovenia has tolls for heavy vehicles only and Hungary has a weight/distance heavy vehicle road charging system.  However, having both vignettes and tolls would add a level of complexity that would mean some foreign motorists would think that paying for a vignette would also cover tolls.

Total Croatia News reports that Goranko Fižulić, former minister of economy, published a letter to the transport minister Siniša Hajdaš Dončić with five reasons why Croatia should introduce vignettes:

- Revenue: "Slovenia has introduced vignettes and in 2013 collected revenues of 327 million euros. In the same year, Croatia had revenues of 185 million euros". This is a function of vignettes applying across a wider network than tolls, but also Slovenia geographically having proportionally higher transit traffic.

- Lower employee costs: "Slovenian motorway company DARS has 1,237 employees, and HAC (Croatian Motorways) has 2,503 employees, with one third of them working on the collection of tolls. HAC spends 32 percent of revenues on salaries and other employee costs while DARS spends just 10,39 percent." More electronic tolling may reduce this, but vignettes require staff for enforcement too.  It is not clear that a change would make much of a difference.

- Annual vignette (product most likely to be used by Croatian motorists) would only be 546 kuna (around $81): "just from domestic and foreign passenger cars, the total revenues would climb to 509 million euros".

- Successful use of vignettes in other countries:  "Vignettes were successfully introduced, along with Slovenia, in Austria, Switzerland, Slovakia, Hungary, Romania, and Bulgaria. Germany will also introduce them starting on 1 January 2016".  Germany has faced delays for car vignettes, but of the others four have embraced distance charging for heavy vehicles (along with Germany) with two others seriously considering it.

- Better use of motorways lowering costs of maintenance of other roads and improving safety: "Domestic vehicles would use motorways in far greater numbers, which would reduce the cost of maintenance of other roads, increase safety and reduce the number of traffic accidents. The cost of using motorways would be drastically reduced for regular users of highways and the economy as a whole"

Fuel tax in Croatia is around €0.42 per litre for petrol and €0.33 for diesel, this is 23rd in the EU for petrol and 26th for diesel, suggesting scope to increase diesel (particularly given its relative environmental impact), but none of this revenue is linked to road spending.   It is lower than fuel tax in Slovenia and Hungary (indicating Croatia may gain a little from trans-border users filling up in Croatia in preference to its EU neighbours. 

A better response may be to look at distance charging for heavy vehicles to replace or supplement  tolls on a few routes, as such a system should see revenue grow as freight traffic grows through the country (and can be used to charge on a wider network).  If tolls are abolished, a light vehicle vignette would make sense as an interim measure as well.  Croatia's E70 motorway is a key corridor linking Serbia (and Macedonia/Bulgaria) to Slovenia, Austria, Italy and Germany, the potential for revenue growth should be considerable. 

Croatia with the key E70 corridor highlighted

With the success of Hungary's distance based heavy vehicle charging system,  Croatia could do worse than look at that model (Slovenia has previously investigated and abandoned this option because of cost, but it was looking to use a different procurement approach to that which has been adopted in Hungary).  However, it needs to look at existing tolls and other charges, and decide whether it wants to add to what it already has, or be bold and make a shift towards distance based charging (that may have targeted rates for existing toll roads).  Hungary transitioned from manual tolls to vignettes to distance charging for heavy vehicles over the past 20 years (and from tolls to vignettes for light vehicles).  Croatia could do the same, but given the distances for much transit traffic through Croatia, I'd suggest it skip vignettes for heavy vehicles and just go for distance.   

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