France's nationwide truck toll on hold indefinitely

Back in July, I noted that the long awaited Ecotax, heavy vehicle road charging system for France, was on hold, because of politics.

A new plan was developed to only toll 4000km of roads, not the 15000km originally envisaged, with the emphasis being on only charging motorways and major highways with parallel tolled motorways, and also on handing a political gift to Brittany, where opposition to the toll was greatest.

The problem in Brittany was that the French Government's efforts to convince people, or more specifically, truck owners and operators, that paying by distance is fair, didn't wash with those in far off parts of France.  They figured the toll was "unfair" because they "had" to use longer stretches of road.  Quite why others should pay for them to have roads they use because of where they choose to locate themselves wasn't clear, but then France has multiple layers of accretive subsidies, and anyone who dares challenge this simply meets protest.

In July, it was envisaged that the toll system would start operation on 1 February 2015, but not any more.  

According to The Local,  the toll has been shelved, indefinitely.  It appears that the deep unpopularity of the Socialist Francois Hollande government has put pressure on this project, which ironically had been approved under the Sarkozy government. 

Ecology Minister (and former leader of the Socialist Party) Ségoléne Royal announced the government would not be introducing the tax.  The rightwing opposition said it showed that there was "no government" because of constant "zigzagging".  The EELV (green) party said the decision was "disastrous" showed "lack of courage", claiming it would cost the government €450 million in lost net revenues per year (it is closer to €550 million).  

Reasons given for the suspension were:

- Difficulties of implementation (which is simple nonsense, as it was never an issue technically, rather politically);

- Concerns about costing jobs in the haulage industry.

The government instead decided to tax more heavily the multiple companies that own France's privatised toll motorway system, although it is not clear how this also wont cost jobs in the haulage industry, or it simply will mean more traffic on the untolled government owned roads as tolls increase.

The consortium contracted to implement the system will now seek many millions of Euros in compensation for the termination of contract.

What could have been done?

I'm tempted to think that rather than scrap the scheme, efforts could have been made to reduce other taxes on the haulage sector in exchange for the Ecotax.  Reducing taxes on licensing/registration of liable vehicles would have helped, and be more efficient transferring such costs from the ownership of a vehicle to usage.  However, a more complex option would have been to offer a refund mechanism that included refunding part of the diesel tax.  This would have had to be done to generate some revenue to make it worthwhile, but at least by cutting other taxes there would be a chance to gain some consent for the project.

Unfortunately, it looked like a chance to just increase taxes on one sector, without little publicity about the roads that would get fixed by the project.  Quite simply, there needed to a proposition to road users to support it (bear in mind it was only for trucks), making it just a new charge with little in return is not going to be popular.

It's a shame, because France does have a problem of heavy use of untolled motorways, but the right solution needs to be about striking a deal with those paying, that the money generated goes into the networks being tolled and that another tax is cut in return.

Unfortunately, that isn't going to happen.

France's Ecotax distance based truck toll to be scaled back

As has been previously reported, the French Government had been committed to implementing a distance/size based heavy goods vehicle charge on all national highways (this excludes the extensive private and public corporation owned toll motorway network), using GPS technology, called Ecotax.  As the name suggested, it was sold on the basis of improving the environment, but was driven by a desire for net revenues from foreign trucks and to rebalance the use of the highway network, by reducing the attractiveness of the untolled national highways that often run parallel (although longer distances) to the tolled motorway network.

The politics behind the concept came under fire late 2013, as the Hollande Government (the laws and contracts for the system having been committed under the previous Sarkozy Government) faced protests on the eve of the system's introduction.   The main complaints being from the trucking sector, opposing additional charges, and businesses in some more distant parts of France, notably Brittany, which have argued it is discriminatory because they are "further away" from other parts of the country.

The calls from the trucking sector for opposing "more tax" are understandable, given no other taxes are being reduced to offset the Ecotax (although the French Government is keen to reduce the budget deficit, given it has not run a budgetary surplus for 40 years and public debt levels are becoming a significant burden).   However, to complain about paying by distance when you locate your business far away from suppliers or customers is almost comedic.  Yes you will pay more, but you use more roads that need maintaining and renewing.  Quite why choosing to live far away from where you want to go, or get things from should be cross-subsidised by others, seems curious.

So the scheme was shelved, until now.

Smaller scale truck toll

So on 23 June it was announced that the Ecotax is to proceed, but on a smaller scale and simply be called a "truck toll".   According to Reuters, Prime Minister Manuel Valls said the new scheme would focus on the roads with the heaviest traffic and will generate 550 million Euros (US$748m) per annum, less than half of the 1.24 billion Euros (US$1.69b) previously forecast. 

It will start on 1 January 2015, following a three month testing period (and changes to the law and no doubt contracts with the suppliers). 

What has been lost?

The network to be tolled is now only 4,000 km long, compared to the 15,000 km that was going to be tolled before (comprising 10,000 km of national highways and 5,000 km of secondary routes that would have been severely affected).  That is a significant reduction in scale, and is seen by comparing the maps of the original scheme and the new one below:

Original planned Ecotax network

Ecotax network from 1 January 2015

Very few highways to the west and the south are now to be tolled, with the emphasis being entirely on state highways which have parallel tolled highways and heavy volumes of traffic.  It's a significant compromise.   Part of this is that all but one road in Brittany is exempt.  In other words, protest in France and politicians cave in.

The Local reports further changes.  It says the charge levels could be 0.13 Euro per km, whereas before the range was from 0.025-0.20 Euro per km.  

Circus, agricultural and milk collection vehicles will be exempt.  The circus example is obviously some minor cultural exemption for little reason that lobbying, but the agricultural lobby, which is a long standing campaigner for some of the most generous subsidies in the world, has won again.   Agricultural equipment being relocated short distances is one thing, it is another for a whole new category of freight vehicles to be exempt, for no other reason than the politics behind expecting one of France's most mollycoddled sectors to be treated like everyone else. 

Still it is significant to introduce it in the first place, and it makes sense in itself, although the argument that other taxes could have been reduced to offset it is a valid one.  Diesel tax in France is 0.44 Euro per litre (US$2.26 per gallon), although EU law sets a floor that would only allow a reduction of around 17%, and the French Government is desperate for more tax revenue, rather than rebalancing the tax system (and reducing tax on diesel would benefit cars with no new toll for them).

The net revenues are said to be dedicated to new urban public transport projects, which of course doesn't have a direct relationship with trucks on intercity highways, but is better than just adding money to general funds.  Of course, not spending the money on roads is a good way of generating opposition.

What isn't clear is how it affects the contract with supplier Atlantia, which will still seek payment for services, from a smaller revenue pool.  It will add to the net costs of the system relative to revenue.

I previously reported the costs as follows:

 - 250 million Euro (US$306 million) per annum consists of operating costs.

- The remainder will be to recover the 600 million Euro (US$735 million) capital costs over the period of the concession, which is 11.5 years.

Those operating costs will not drop by 60% just because the revenue does, I suspect more like 30%, and the capital costs will change little given much of them have been incurred.  So it may come to pass that 40-45% of the revenue generated will be spent on the costs of the system, rather than 20-25%.  That hardly looks like a great deal for anyone paying.

What this doesn't mean

It doesn't mean the technology doesn't work.  It doesn't mean that it isn't a good idea.  

What it does mean is that the biggest problem is the politics of adding a new charge on top of an industry that faces taxes for owning trucks and high fuel taxes.  

Moreover, it does mean that unless you have the politics addressed and have the determination to go through with it, you'll face losses of revenue in backtracking, and it can result in compromises that unfairly target some less vocal groups against the more vocal (and indeed violent). 

The result, will be more traffic on tolled highways, a little less on the newly tolled state highways, and a little revenue for the state, and probably a modest reduction in environmental impact.

What it needs is a more convincing story around where the money will be spent, the rates the charges are set at, and in having some offsetting reduction of other taxes, what it is now is a smaller scale political fudge.

France's EcoTax suspended - politics triumphs for now

It appears that France's EcoTax (HGV distance based road charging/tolling system) is now on hold, although the latest reports indicate that it will still be introduced on 1 January 2014.  It is not because of any technical problems, it is politics.

France does protests on a level unseen elsewhere

I am not surprised.  The politics of France is peppered with disruptive protests by vested interests unhappy whenever governments implement major changes to the status quo - typically by specific interests negatively  affected (never by the wider group of citizens positively affected).  The OTRE (Organisation des Transporteurs Routiers Européens), a trucking industry association, comprised mainly of smaller operators, has protested that it would hurt their businesses.  Their protests have included road blocks, with a deliberate attempt to halt foreign trucks (they aren't so keen on competition from their European partners).  Protests have included vandalism and arson against enforcement gantries (which include ANPR cameras, laser profilers and DSRC detectors).

It is difficult to imagine that level of anger in many other countries.

France's Ecotax truck toll network

Ecotax isn't a creation of Hollande's socialist government, but wasn't opposed when in Opposition

The Ecotax proposal was approved by the previous centre-right Sarkozy administration, and was supported by the Socialists (who run the current government) at the time, but some in the government now think that the amount that Ecomouv - the consortium that won the contract to develop, install and operate the system - is paid, is excessive (Ecomouv is to receive 20% of the gross revenue, which is quite generous).  Ecomouv is a consortium comprised of Autostrada (the well known Italian toll road owner/operator), Thales (a French technology, aerospace and defence company), SNCF (the French national railway), SFR (French telecommunications company, primarily operating mobile services) and Steria (French IT-services company).  

So the socialist bent of the French Government is coming out in thinking that the private sector may be profiting too much from the system.  

My view is that costs are quite high, although they ought to come down over time, and part of the procurement is to allow for competitive service delivery, which ought to keep pressure on costs (although it isn't clear that Ecomouv has quite the same pressure). 

However, the simple point is that a large government contract to collect revenue is always going to be a chance for operators to ensure they minimise costs so they maximise their own revenue.  That obviously is controversial when it comes to a tax.  Given the system does involve GNSS based technology with on board units, communicating via the mobile phone network, the simple point is it will be costly to introduce.  owever, I would not be surprised if political risk is factored into the price - which is wise.

Meanwhile, it appears, in rather typical French style, that government is now negotiating with protestors over what to do next - even though the contract with Ecomouv binds the French Government.  In short, the key risk is that rates will be lowered, but Ecomouv will insist on receiving the fees it contracted for.  General taxpaers, the interest group that seems to be least loud, may pick up the difference for a short while at least.

Macquarie Atlas Roads revenue up in June 2012 quarter

The Herald Sun of Melbourne reports that toll road concessionaire Macquarie Atlas Roads has stated that toll revenue across its investments increased 1% in the latest quarter, despite a weighted average toll volume reduction by 1.7%.  The headline results are reported by MAR as follows:

• In 6 months to 30 June 2012, weighted average toll revenue is up 0.9% compared to the same period the previous year.
• Autoroutes Paris-Rhin-Rhone (France) has seen a 0.5% reduction in revenue in the past 6 months compared to the previous, reflecting a 5.2% reduction in heavy vehicle traffic and 2% reduction in light traffic.  This was put down to the weak economy, reduction in workdays (negative for trucks, but the positive effect on cars was offset by poor weather) and high fuel prices.
• Dulles Greenway (DC) has seen a 8.3% increase in revenue in the past 6 months compared to the previous, with a 0.3% increase in total trips.  Revenue increased due to an average 8% increase in pricing on 1 January 2012 approved by the Virginia State Corporation Commission, indicating very low demand elasticity relative to pricing.
• M6 Toll (UK) has seen a 3.1% increase in revenue in the past 6 months compared to the previous, with a 0.6% increase in trips (although this involves a 1.8% increase in workday trips, but 3% reduction on weekends and public holidays).  The proportion of cash transactions (indicating more occasional users) increased by 1.7% of all transactions.  Revenue increased due to changes in pricing on 1 March 2012 and increased demand.
• Chicago Skyway (IL) has seen a 4.9% increase in revenue in the past 6 months compared to the previous, with a 1.1% increase in trips (comprising a 2.6% increase on workdays but a 1.6% decrease on weekends/public holidays).   Revenue and trip increases were driven by a 18.9% increase in heavy vehicle volumes, offsetting the 0.9% decrease in light traffic.
• Indiana Toll Road has seen a 7.7% increase in revenue in the past 6 months compared to the previous.  Traffic was up 2.6%.  Most notable is an 18.7% increase in heavy vehicle traffic paying using manual collection rather than account based transactions, this compares with only a 2.2% increase in traffic for all light vehicles, and heavy vehicles with accounts.  Toll rates were revised in 1 July 2011 which also contributed to higher revenues.
• Warnow Tunnel (Germany) saw a 7.1% decrease in revenue in the past 6 months compared to the previous.  This followed a 12.2% decrease in total trips.  The primary reason is that roadworks on the “competing” untolled route ceased in October 2011, resulting in a diversion back to the no longer disrupted untolled option.  Toll rate increases on 1 November 2011 and 1 May 2012 partly offset this reduction in demand, although it would not be surprising if the November 2011 increase induced a greater shift in demand as the tolled route was seen as even less competitive on price and travel time.

France's Ecotaxe - national truck tolling, distance based

More information has been published about the French nationwide heavy vehicle road user charge system now under development, thanks to the "Ecomouv" consortium producing a website in multiple languages.  

 Given interest in vehicle mileage taxation in the United States and heavy vehicle distance based charging in Australia, it will be notable for both France and Germany to be blanketed by such charges on major highways across their territories.

It's worth noting this tax is in addition to existing taxes in France, including diesel tax up to* EUR0.4284 per litre (US$0.525).

Ecomouv is a subsidiary of Italian toll road operator Autostrade, which is partnered with mobile phone network operator SFR, state owned railway operator SNCF, IT services company Steria, and French electronics company Thales.

Some key useful facts:

- The distance based tax will apply to all goods vehicles weighing over 3.5 tonnes, both French registered and foreign vehicles;

- The stated purpose is to encourage more environmentally friendly goods transport, in part by having pricing that differentiates by emission class and to discourage empty running;

- The Ecotaxe will also normalise demand between tolled motorways and untolled routes, promoting more optimal use of the entire national road network;

- The taxed network comprises 10,000 km of national highways and motorways that are not concessioned routes (many of those are tolled and will not be subject to this tax as well), and 5,000 km of secondary roads (largely to prevent "rat running" by truck drivers seeking to evade the tax);

- A 25% discount will apply for trips within three "peripheral regions", largely to promote regional development;

-  The system as described appears to be a "light client" form of GPS enabled distance measurement, whereby information about distance travelled on charged routes is calculated on board the vehicle, but then transmitted through mobile telecommunications networks to a back office system to calculate the tax liability;

- Exempt vehicles include all buses, some public vehicles (e.g. military) and vehicles used to transport agricultural goods;

- Options to pay include a prepay account, or a postpay account (the latter requiring a credit check);

- Enforcement is carried out using a network of gantries to take images of vehicles and their number plates if any are identified as not having a functioning on board unit;

- Mobile enforcement units will also roam the network to remotely check vehicles at random;

-  Revenue is estimated to be 1.24 billion Euro per annum (US$1.5 billion), of which 760 million (US$930 million) is to go to AFITF - "L’agence de financement des infrastructures de transport de France", a public body that is responsible for central government expenditure on railways, roads, inland waterways and ports. 160 million (US$196 million) to regional and local government.  

 - 250 million Euro (US$306 million) per annum consists of operating costs.

- The remainder will be to recover the 600 million Euro (US$735 million) capital costs over the period of the concession, which is 11.5 years.
-  About 550,000 French and 250,000 foreign trucks are expected to be users of the tolled network.
-  It is expected the tax will increase the cost per tonne of transporting freight in France by 2.9%.

A zoomable map of the taxed network is available here.

It is due to be operational as of mid 2013.

Actual tax charges are NOT published yet, but the range appears to be from (Euro) 0.025c/km (US$0.03) to 0.20c/km (US$0.25) according to a French presentation from the MEDDTL (government body responsible) with weight and emissions class being the key determinants.

Conclusion

The French Ecotax is essentially a way to make money from trucks using the government owned highway network, which are currently priced off of the private and publicly owned tolled motorways.  It is to generate new revenue, particularly from foreign lorries that enter France from Spain, Italy and Germany, some of which are avoiding the heavy vehicle distance charging systems in Germany and Switzerland as well as the French toll motorways.  It essentially "plugs the gap" in charging trucks to use France's highways.

The cost of collection, including the recovery of the cost of capital is 25.8% of the total revenue.  This is high, and this figure will do little to encourage take up of such systems elsewhere.  Given that technology has moved on substantially since the Swiss LSVA was introduced in 2001 and the Germany LKW-Maut in 2005, I'm surprised that costs are being claimed as so high.  A technologically robust path has been adopted, as it replicates much of what is done in Germany.  However, I'd be surprised if those costs are realistic after about 4-5 years of operation.  Costs may be closer to 50% of revenue in the first year and 30% in the second, but in the long run it should be closer to 10% (as users become familiar with the system and the initial installation, publicity and enforcement efforts are better matched to ongoing renewal rather than one off inauguration).

I have figures for other systems, and will endeavour to publish those in due course in order to get a better comparison of  relative costs.

Other ways of looking at the costs:
Average capital and operating costs of 355 Euro per truck per annum
EUR0.03 per km in capital and operating costs

*  Diesel tax in France is determined by regional governments which may vary it between EUR0.4284 and EUR0.4169 per litre, with a EUR0.0135 surcharge to fund certain projects being optional.

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.

Abertis sees credit rating drop due to Spanish toll road demand

Spanish toll road investor Abertis and its French subsidiary SANEF have both had their credit ratings cut to BBB by Standard & Poors according to Reuters.

Abertis has a network of 1500km of toll motorways in Spain via 8 subsidiaries (59% of toll roads in Spain by length), and a minority stake in another 200km of toll roads in Spain. It also has a nearly 15% share of Portuguese toll road operator Brisa, and 25% ownership of RMG (company holding non-tolled concessions on two UK roads). It also owns or partly owns companies responsible for around 700km of Chilean toll roads, has a part share in concessions over 89km of roads in Puerto Rico and has a controlling stake in the concession of one road in Argentina.

SANEF has a network of 17570km of almost entirely toll motorways in France, in the north and east.

The reason given for the downgrade is “of volatility in traffic volumes experienced by its Spanish toll road network operators”

Interesting statistics from the press release:

- Average daily traffic declined by 24% between 2007 and 2011 on Abertis's Spanish toll roads;
- In 2012, S&P forecasts a further contraction by 9% on Spanish toll roads;

- This is driven by very high unemployment, weak economy;

- Abertis's Spanish toll roads have greater exposure to competition from untolled roads than similar roads in France or Italy.

- 80% of dividends in past three years originated from Spanish toll roads, with concessionaire Acesa (541km of road) contributing 70% of that. This decline will be partly offset by good performance on toll roads elsewhere, and expected tariff increases and cost savings.

However, S&P sees risks in the proposed acquisition of the Brazilian and Chilean toll road operators of Obrascon Huarte Lain (OHL) which includes over 3100km of roads in Brazil and around 340km of roads in Chile because it Brazil is:

-- An emerging economy, with a soft currency that could suffer  depreciation vis-a-vis the euro. 
-- A relatively dynamic regulatory environment in Brazil, where the bulk of the operations to be integrated are located. Unilateral changes to concessions are allowed in Brazil, although appropriate remuneration must be provided to the toll road operator to restore the concession's economic
balance.
-- A greater proportion of heavy vehicle traffic, which we view as more volatile than light vehicle traffic. Heavy vehicle traffic volumes account for more than 30% of total traffic volumes on the roads to be integrated, compared with 15% on average on Abertis' network.

On SANEF, S&P says:

Sanef operates the third-largest interconnected toll road network in France. Although the company is exposed to variations in traffic volumes, it benefits from a strong competitive position; favorable concession agreements, including yearly inflation-linked tariff increases; high profitability, and positive free cash flows. We consider the risk of acquisitions and diversification to be low. These strengths are partly offset by Sanef's high indebtedness, and its relatively rigid dividend policy.

Conclusion

Even a casual observer of Spain's economy can see the crash of property and construction dramatically affecting overall demand, and it appears far too many concessions were predicated on forecasts of demand that now look unattainable in the medium term.  Abertis may be big enough to hold onto most of what it has, but it is likely this sector will remain tough for some time, and there is pressure to have consolidation and refinancing so that such roads can be on a sustainable footing.  There is rumour that the Spanish government is considering how to address these problems, and it may even think about having some form of charges on existing roads.

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.

French Ecotax truck toll appeal successful

It appears that France's distance based truck toll system is going to roll, once more.

Italian toll road operator, Atlantia, has produced a press release announcing that the French Council of State (appeal court) has overturned the decision by the lower court that had annulled the tender for the proposed "Ecotax" distance based toll for trucks to apply to government owned untolled motorways.

I previously reported on the suspension of the tender, the conflict of interest issue raised in the case and the decision to appeal the original court decision.

The Ecotax is intended to apply to all trucks over 3.5 tonnes in weight, on 12,000 km of highways and 2,000 of secondary roads, and would mean around 600,000 French trucks and 200,000 foreign trucks expected to have accounts.  The system was meant to be operational from 2013, but obviously now faces a delay of around 6 months.  Estimated revenue was around 1.2 billion Euro per annum, with charges based on distance at rates of between 8-14 Euro cents per km (US$0.11-US$0.20).

As a result, the Autostrade led consortium is the winning tenderer, as had been originally the case and confirmed the tender process was valid after previous claims of a conflict of interest between advisors RAPP Trans who were working for the government, but who had also undertaken work for Autostrade.  The contract is expected to be for 13 years and Autostrade will now be negotiating the final terms before signing the contract.

No doubt the French Government will be relieved.  The Ecotax is a new charge, so will be new revenue and the sooner it is operational the better for the government.

Of note is that the Ecotax will be a distance charge, with distances measured using GPS technology.  This will make it the third system based on GPS to charge for distance (after Germany and Slovakia), and the fifth system using GPS either to supplement another form of distance measurement (Switzerland) or as a voluntary option (New Zealand).   The objective of the French government is, in part, to rebalance demand between tolled and untolled highways, as there has been an issue of trucks choosing not to use the private and state owned toll roads in favour of the untolled parallel routes.

UPDATE:  More details on France's Ecotax here.

France's Heavy Vehicle "Ecotax" to go to appeal

I reported some weeks ago here and here, that the tender for the proposed French heavy vehicle "ecotax" had been frozen because of a French court intervening regarding irregularities in the procurement.

The "Ecotax" is intended to be essentially a distance based toll system to apply to national highways in France - that being all major highways that are not currently tolled/owned by private concessionaires.  In effect, the proposed distance charge (which would also vary by vehicle size) would address issues of diversion from tolled routes to untolled routes, but was primarily intended to generate additional revenue whilst heavily incentivising a shift towards trucks with cleaner engines.  The "Ecotax" is intended to apply to all freight vehicles over 3.5 tonnes and 12,000 km of national highways (and 2,000 km of secondary highways that would otherwise face diversion from the national routes).  An estimated 600,000 French and 200,000 foreign trucks are expected to have accounts and the system is intended to be operational by 2013.

AFP reports that:

Thierry Mariani, Secretary of State for Transport has confirmed that the government has appealed the decision to the Conseil d'Etat, although it is understood this will delay development by some months.

The winning consortium was called Atlantia, on the basis of a 13 year contract worth 2 billion euros.  Atlantia comprises:

- Italian toll road owner/operator Autostrade (70%)

- French electronics manufacturer Thales (11%)

- French railway operator SNCF (10%) (which raises interesting issues of cross-modal competition)

- French Mobile phone operator SFR (6%) and

- French IT provider Steria (3%).

However, the issue was that one of Autostrade's past advisors - RAPP Trans - was acting as advisor to the French Government meaning the decision to award the tender to the consortium was against "the principle of transparency and the principle of inviolability of applications" according to the administrative court in Cergy-Pontoise.

A Dutch (language) website indicates that apparently the annual revenue estimated for the proposed "Ecotax" was 1.2 billion revenue of which two-thirds was intended to be hypothecated for the government infrastructure agency AFITF.   The average charge is intended to be 8-14 Euro cents per km, with discounts of up to 25% for more remote parts of the country.

One thing is for sure, Europe's likely second largest truck tolling system will be delayed and consultants will have to be particularly cautious about ensuring real and apparent conflicts of interest are addressed.  Certainly RAPP-Trans's activities around this project will be under the spotlight in the coming months.

UPDATE:  Appeal successful
SECOND UPDATE: More details on France's truck Ecotax here. 

French court decision identifies RAPP Trans on Ecomouv conflict of interest

Further to the story from yesterday, French website Transport Logistique reports that the Swiss based consultancy firm RAPP Trans is the firm implicated in presenting a potential conflict of interest with the French heavy vehicle tolls project.

The report (in French) indicates the consortium ALVIA (comprising Sanef, Siemens and Atos) alleges "that the competitive dialogue did not obey "the principle of transparency and the principle of inviolability of applications".

The problem allegedly being that the French government relied on RAPP Trans to provide it with professional services.  RAPP Trans is a technical consultancy, best known for having designed the Swiss LSVA heavy vehicle distance based charging system that has been in place since 2001.  It has also undertaken other technical advice work in a number of European countries. 

RAPP Trans also allegedly has "close trade links" with Autostrade, the lead company in the winning bid for the French system, through work with the European Commission.

The fundamental legal question in the appeal will likely be whether those links are sufficient to overturn the tender. 

The appeal will be most interesting.  If the appeal does not succeed, it will raise questions about how transparent RAPP Trans was with the French government about its relationship with potential suppliers, it will possibly create a far higher standard of due diligence of separation of roles between advisors (if RAPP Trans had done work for Autostrade during the time of its work for the French government, it would appear to be a clear cut case of conflict, but if the relationship was beforehand it would seem less clear).   It could simply mean consultants have to choose more distinctly whether they want to advise governments or advise suppliers.  It is a decision that gets undertaken quite frequently - and it does not look good if any company is caught out appearing to be able to give unfair advantage to tenderers.

French truck toll system (ecotax) on hold

A French Court has suspended the contract offered to the Autostrade led consortium to develop, build, install and operate a distance based heavy vehicle toll system on untolled French highways, because of allegations of conflict of interest according to Le Monde.   The Ecotax contract had been won by a consortium called EcoMouv.

The issue appears to be that one of the companies associated with the winning consortium was also providing advice to the French government that issued the tender - a classic case of conflict of interest.   It is hardly appropriate or ethical business conduct if this is the case, as one cannot be seen to be providing advice to a government entity that issues a tender, whilst also being party to one of the tenderers.

More details will be reported as they come to hand, but the Autostrade led consortium  (Ecomouv) intends to appeal the decision.  If the decision holds, at the very least it will mean the tender will need to be started from scratch, and anyone that was a party to the alleged conflict of interest would be ruled out - which could be very costly for those involved.  However, regardless of the outcome of appeals, it would appear that the proposed heavy vehicle toll system for France is suspended.

UPDATE:  It's all go, appeal successful.

UPDATE 2:  More details here on the Ecotaxe.