Tel Aviv to introduce congestion charging

After New York (crossing fingers), Tel Aviv looks like being the next city to introduce congestion pricing after the Israeli Government seems to have agreed, notwithstanding opposition from the Transport Minister and tepid support from the Finance Minister, to a plan for a triple cordon around the city. 

Why?  

To raise money AND reduce congestion. The scheme is motivated by the usual combination of a desire to significantly reduce traffic, but also raise a lot of money. It seems the latter is very important, although the indicative concept is definitely intended (due to the geography and the time of operation) to make a sizeable dent on congestion (although no data on what impact it will have has been released). 

What sort of scheme? 

A triple cordon. I haven’t been able to source maps of where the zones MIGHT be (yet), but basically it is described as an inner city ring, a second ring 3-7km from the inner ring and a third ring 7-12 km from the inner ring, all bounded by a series of major roads. Ben Gurion Airport will be within the outer ring.  I've never had the good fortune to visit Tel Aviv so my geographical knowledge is very limited.

These ring locations are yet to be finalised, but have been described as follows:

The inner ring will include central and south Tel Aviv. The middle ring will include Ramat Gan, Givatayim, Bnei Brak, Holon and Bat Yam and Azur. The outer ring will include Herzliya, Petah Tikva, Kiryat Ono, Givat Shmuel, Ganei Tikva, Yehud Monoson, Or Yehuda, Rishon Lezion and Beit Dagan. 

This appears to be quite a large scheme in terms of physical scale, covering vast areas of Tel Aviv, so it will have quite a significant impact.

When will it operate and what types of vehicles will it apply to?

It is intended to operate weekday peak times from 0630-1000 and 1500-1900 and will apply to cars, trucks and motorcycles. Buses, taxis, emergency vehicles and cars with disabled parking badges will be exempt. Trucks will be charged twice the fee of cars. No discount or exemption for residents living within any of the cordons has been announced.

This is largely sensible from a policy point of view, although exempting taxis may be more to avoid protests from that sector than any economic rationale. Taxis are, after all, cars that carry people for hire. Double the fee for trucks makes sense from a road space occupancy perspective, and having minimal exemptions is a good idea to minimise costs.

How much will the fees be?

Various reports have indicated that the fee schedule will see a maximum charge of NIS 37.50 per day (US$11.62), with the standard fees ranging from NIS 2.5 (US$0.77) for the outer ring, NIS 5 (US$1.55) for the middle ring and NIS 10 for the inner ring (US$3.10). These will be applied separately for inbound and outbound travel. 

What technology?

The primary technology to be used will be Automatic Number Plate Recognition, although one report indicated that drivers with accounts (and implicitly a toll tag) would be charged less (NIS 2, 3.5 and 7 respectively). 

How much revenue will it raise?

The proposal is expected to raise NIS 1.3 billion (US$400 million) after costs. Which is reasonable, although another report indicated it would raise NIS 2.7 billion (US$840 million), which surely can't mean it will cost NIS 1.4 billion to run (but may reflect a change of forecasts).

What will it be used for?

The net revenues are to be used to help fund the Tel Aviv metro project, which has a construction cost of NIS 150 billion (US$46.5 billion). However, the metro construction isn’t expected to start until 2025 and be completed in 2032, so it is will be interesting to see the public reaction to motorists paying for a project many wont be able to use for some time. 

What will be done in advance?

 This isn’t the only public transport project though, as by the time the congestion charge is live, significant improvements to bus services and at least one of three light rail lines will be open (two more are under construction) to help support modal shift. 

When will it be in operation?

2024.

Who will be responsible?

The Israel Tax Authority will be legally responsible for collecting the charge, but the actual management, operations and collection will lie with Netivei Ayalon, a company that operates under the auspices of the Transportation Ministry and which I believe is already responsible for managing highways around Tel Aviv include toll lanes. The role of the new company will be to plan, build, operate and maintain the necessary funds to charge the congestion charge.

What do the politics look like?

Weird.  The report from Globes says the following:

The charge will be introduced despite the opposition of Minister of Transport Meirav Michaeli, who sees it as a regressive tax, which will hurt the less well off. In the end, senior Ministry of Finance budget division officials prevailed in their determination to include the congestion charge in the Economic Arrangements Bill. The officials prevailed even though Minister of Finance Avigdor Liberman himself said he was not prepared to fight for the charge.

It will take at least 30 months before the infrastructure will be in place to implement the charge. The Tel Aviv congestion charge will have to survive a Knesset vote and the long time until it comes into effect.

Two days later, the Jerusalem Post has reported that the Minister of Transport has "now embraced it as a quick short-term solution to Tel Aviv’s traffic problems, and as a source of funding for other transportation projects".

It looks almost like officials have said "you need to do this, you have no choice (fiscally)".  However, it makes perfect sense that this has been announced just after the new rotation government was formed on 13 June 2021, because the sooner this can be placed into law the better, given how fragile Israeli politics is.

Conclusion?

Good luck to Israel and Tel Aviv, it seems like a very bold proposal, but congestion in Tel Aviv is reportedly endemic and as we all know, simply building more transport supply is NEVER enough, whether roads or public transport. The world needs more good examples of congestion pricing.  Regardless of whatever happens around the details, I hope something happens. I fear three cordons may be going too far, but at least two are likely to be needed to have a meaningful impact, and half of that impact (given the experiences of Stockholm and Singapore) will be time of day shift not modal shift. There is a lot of work to do, but beyond congestion, it seems hard to see how fiscally the Tel Aviv metro can be afforded (or even attract enough patronage) without such a measure.

Israel tests reverse congestion pricing, but rejects actual congestion pricing

In 2013, Israel tested a form of reverse congestion pricing, which had parallels to the Spitsvrij and Spitscoren schemes trialled in the Netherlands.  According to CTech:

Back then, 400 out of 1,200 participants decreased their rush-hour travels by 16.4% on average, netting a few thousand shekels in the process. 

In essence it involve regular users of a road being paid money to reduce their road use, which in turn reduces congestion by incentivising them to drive less at peak times, choosing to change travel time, mode or frequency of travel.  The same report indicates that the new reverse congestion pricing pilot scheme will see participants granted a travel budget of ILS4500 (US$1276) which will be drawn down by peak time driving, but topped up by carpooling.  The idea being that at the end of the pilot, participants will be able to receive the remainder of their budget if they have saved it (with a cap of ILS2000).

It is being led by Ayalon Highways Company, a state road company, with assistance from two suppliers (Pointer Telocation and Pango Pay & Go).  The system will necessarily involve GNSS devices to identify where, when and how far participants drive.

Three stage pilot

The first step will see 500 participants recruited from the previous 2013 trial, mainly for a testing phase of three months.  This will be followed by a much wider recruitment effort, with another 4,500 participants to be recruited from the general public.

If successful, the report indicated that it may see up to 100,000 recruited, in 5,000 participant groups every few months.  If this is the case, it will be quite some budget for that many participants.  Think of 100,000 x ILS4500 = ILS450m (US$128m) to pay people to not drive.  

Actual congestion pricing

Paying people to not drive proves the effectiveness of financial incentives to change behaviour, but it is expensive and can raise questions about how fair it is for taxpayers' money to be spent on the most frequent drivers NOT driving (when those who don't drive at peak times at all wont get rewarded for not congesting traffic).

Real congestion pricing is more sustainable and likely to be just as effective, but Times of Israel reported that a cordon charge had implicitly been considered for Tel Aviv but with no details, noting that the toll lane instituted on Highway 1 had made little difference.

Israeli business publication Globes reported the view of the Minister of Transport Bezalel Smotrich:

There is no reason to impose a congestion fee at this time, because a congestion fee penalizes the public in order to persuade people to travel on public transportation - but people have no alternative. You don't levy fines when people have no alternative. The time is not ripe to impose a congestion feel on the public, despite the temptation to do it in order to reduce the budget deficit.

Unfortunately, the oft-repeated view that congestion pricing needs public transport as an alternative for all users continues to be spread.  There are other alternatives, as a well designed congestion pricing scheme would encourage changing the time of trips, and also note that at peak times some trips should be discouraged (e.g. social, recreational), with the alternative being to not travel or travel at another time.  Furthermore, congestion pricing could help offset other taxes or charges on motorists as well.

Hopefully the expansion of reverse congestion pricing might generate further innovative thinking to help encourage some application of actual congestion pricing in Israel.

News briefs - Australia, Belarus, Israel

Australia - Queensland Government to privatise motorway company

Queensland Motorways is a company owned by the Queensland Investment Corporation, the Queensland State Government's holding company for commercial state owned enterprises.  It owns three key toll roads in Queensland, but also acquired from Brisbane City Council the Go Between Bridge, which I profiled over two years ago as being an unprofitable disaster.

Queensland Motorways have paid the Council A$112 (US$98) million for the 50 year tolling rights to the bridge.

Previously it acquired the disastrous Clem 7 toll tunnel motorway, which is subject to a lawsuit over demand and revenue forecasts.  It paid A$618 million (US$538 million) for the road, not bad given it cost A$3 billion to build.

So now the Queensland Government thinks it is a good time to divest itself of this investment.  The Australian reports it is worth about A$4 billion (US$3.5 billion)

The report says:

Groups likely to be interested in Queensland Motorways include superannuation heavyweight Industry Funds Management, Abertis/Hastings and groups out of Canada including the Canadian Pension Plan Investment Board or the Ontario Teachers Pension Plan.

Of the listed groups, Transurban could purchase the asset with partners, a source said.


Belarus - tolling of existing highways to be expanded

ITS International reports that the Belarus electronic toll system has been expanded to a network of 118km of highways as of January 2014.  This expands the extent of the network to 933km, with the whole system installed and operated by well-known Austrian toll systems provider, Kapsch.   The expanded network will include eleven new gantries for charging and enforcement. The report claims that customers are registered from Belarus, Ukraine, Russia, Poland and Lithuania.

The system uses DSRC, not GNSS technology, paralleling that which has long been in place in Austria, and similar systems on networks in the Czech Republic and Poland.

I wrote about the Belarus system a couple of years ago.   It is branded BelTol  and charges cars €0.04 (US$0.06)  and up to €0.12 (US$0.17)  per km for trucks. Both rates seem rather cheap.  Germany charges between €0.14 and €0.29 per km for trucks, Slovakia €0.08-€0.24 and Austria €0.16-€0.44 per km.   No toll system in Western Europe charges cars by distance across a network electronically.


Israel - New HOT lane being studied

According to Israeli business news website, GLOBES, Ayalon Highways Ltd (a central government owned company responsible for managing Israel's Highway 20) is investigating the value of introducing a HOT Lane on the highway between Roads 1 and 5.  

However, the report is contradictory, which some claiming that a lane will be taken from the existing road, and the Ministry of Transport claiming that discussions are about a new (additional lane).  

The road will connect with the privately owned H-1 HOT lane that was opened in 2011 between Ben Gurion Airport and Highway 20, which I noted at the time,  and is driven entirely by heavy congestion on the existing lanes.  

The proposed lane would offer toll free access for buses, but the "high occupancy" requirement would be 4 car passengers, suggesting that there is a real interest in ensuring the lane maintains a good level of service, although it is far too early to consider what the potential toll levels would be.

Proposed new HOT lane in blue, existing H1 lane in yellow

News Briefs - Israel, South Africa, Tajikistan, Sri Lanka, Indonesia, New Zealand, Texas

Israel

Sale of stake in Cross Israel Highway:  The Cross Israel Highway (Route 6) is Israel's great north-south highway corridor extending from the outskirts of Haifa, to be nestled between Tel Aviv and Jerusalem, towards Beersheva.  The road is owned by concessionaire Derech Eretz Highways Ltd.  Globes reports that Shikun u'Binui Holdings has sold 24.6% of Derech Eretz to private equity company Israel Infrastructure Fund for NIS773 million (US$212 million). The sale reduces Shikun u'Binui's shareholding in the company to 25.5%, and the company reports a return on the sale of 8%.

Globes says:

Shikun u'Binui did not sell its 24.5% stake in Derech Eretz Highways Management Ltd., which operates the Road 6 toll road, and is waiting for permission to increase its stake to 35%. The deal reflects a company value of NIS 3 billion  (US$824 million) for Derech Eretz. The sale is part of IIF's effort to block rival Noy Infrastructures and Energy Fund's acquisition of 49% of the government's rights in Derech Eretz for NIS 1.39 billion (US$382 million). Shikun u'Binui said that the price tag was based on Derech Eretz's value in the Noy Fund deal. 

Price schedule is here in Hebrew

South Africa

Toll road success:  For all of the controversy over the Gauteng tolling project, it is clear that toll roads have already proven profitable for private investors in South Africa. The Financial Mail reports on the success of the N3 PPP between Heidelburg and Cedara (the complete N3 connects Johannesburg and Durban). N3 Toll Concession (Pty) Ltd won the concession in 1999 for a 30 year period, so is nearly halfway through the concession to design, construct, finance, operate and maintain the highway.   The concession has quite diverse ownership.   The article contains comments from Old Mutual Life Assurance Company Infrastructure, Development and Environmental Assets Ideas Fund manager Jurie Swart, who says 25% of the fund is invested in toll roads (other roads include the N4 between Pretoria and the Mozambique border, and the N1/N4 toll road).

Swart claims there are benefits beyond simply financing and building the road:"Each road has a pavement management system that has to conform to national road specifications. It has a dedicated engineering team, and a maintenance programme that must be audited independently. Toll toads like the N3 to Durban are also involved in local tourism efforts. " Certainly there is transparency about the contracts, and they do appear to help ensure a high standard of service.

Investors are keen to follow this with the controversial N1-N2 Winelands toll road. 

For all of the controversy over tolling in South Africa, it has worked to develop a lot of new highways, and most of all the PPPs have delivered world class standards of service.

Prices for the N3 toll road, per toll plaza, are here.

Tajikistan

A report from Trend notes that one of Tajikistan's major highways (M34) is a 354-kilometre toll road from Dushanbe to Chinaz. It is state owned, financed through a $280 million loan from China, which the Tajik government is repaying through the toll which started on 1 April 2010.

It wasn't easy to find much information about this road, but it is encouraging that tolling has penetrated central Asia, and I can only hope Tajikistan is making sure it optimises its revenue from tolls.

Sri Lanka

Toll road opening delayed:  Sri Lanka's first toll road opening has been delayed till December 2011 according to Lanka Business.   I reported the details about the road in July, when it was about to open.  Tolls were already controversial then for risking essentially fraud, and creating potential bottlenecks.  Well the Sri Lanka Road Development Authority has created more controversy with the delay, which is due to failure to complete toll booths and fuel stations on the road.   A fibre optic network is to connect toll booths, and the expressway curiously will have its own fire brigade and police patrols to optimise response to incidents.  Tolls are meant to be collected manually with a closed system involving a ticket issued on entry, and used on exit to determine the price.   Yes, you read correctly, and this is in 2011.

Indonesia

Astratel expands toll road portfolio:  The Jakarta Globe reports that Astratel Nusantara, the highway construction unit of Astra International, has bought 95% of the 40.5-km toll-road linking Kertosono and Mojokerto, in East Java (outside Surabaya) for Rp750 billion ($88 million). 

Astratel also owns:

- 79.3% of PT Marga Mandalasakti which owns the 72.5-km toll road linking Merak (Banten province) and Serpong (outer Jakarta); and

- 40% of PT Marga Trans Nusantara, part of a joint venture building the 12.5-kilometer Jakarta Outer Ring Road II project which will link Serpong and Kunciran in Jakarta.

The total value of its toll road assets will be Rp3.4 trillion(US$384 million).

New Zealand

Hapless toll road debt grows: I've written before about the financial disaster that is the Route K toll road in Tauranga.  The bad story continues.  The Bay of Plenty Times reports that debt from the road is now NZ$60 million (US$48 million) on a road that cost NZ$45 million, and daily traffic count is 5,000.  Revenue needs to double for the road to be viable, and at present trucks form 13% of users, but 38% of revenue.  Annual losses just go on debt.  How long can this continue?

Texas, USA

Indra wins contract: 4 Traders reports that Spanish company Indra has won a €10.6 million (US$14.7 million) contract with TexToll services in Texas (itself a subsidiary of Cintra, the subsidiary of Spanish infrastructure investor firm Ferrovial).  The contract is to implement electronic toll collection back office services on the SH-130 toll road near Austin, the LBJ Express project and the North Tarrant Express Highway project.  It reportedly makes a big impact on the firm's presence in the USA.

Spam

I moderate comments for one reason - spam.  If you attempt to post spam you will be blocked, and you will fail.  I have so far allowed one comment with a spam link, and it wont happen again.  This blog does not exist to promote your business.  It exists to publish articles I find of interest that I hope others find of interest as well.  Spam at best wastes time and is a nuisance, at worst it can spread malware.

Tel Aviv to host distance based congestion charging trials

Traffic Technology and Diamond News both report that the Israeli highway operator, Ayalon Highways, had a tender on its website for a pilot programme to test congestion charging in Tel Aviv. The deadline for participation in the trial was 12 April.

The report says:

- The Israeli government is considering reducing the purchase tax on new vehicles and to replace it with user fees;

- Congestion fees would be “between NIS 0.10 and NIS1.00 (US$0.03-US$0.30) per kilometer of travel inside the city, based on traffic congestion”;

- A pilot programme would have 1200 vehicles, measuring travel by distance, time of day and location; and

- The pilot will involve the following incentive “A motor vehicle that does not travel to the Tel Aviv city center during rush hour and whose congestion charge does not exceed NIS100 ($30), will receive an NIS 250 ($75) credit. The fee, according to the pilot scheme, will not be paid to a driver who disconnects from the system during the trial period.”

Obviously, this sort of trial will be very interesting, and politically contentious. With the successful HOT lane already established from Tel Aviv to the airport, it certainly puts Israel at the leading edge of road pricing in the Middle East, in technical, economic, but most importantly in policy terms in delivering results for users, not just showing off technology.

If GPS based congestion charging proves technically viable and acceptable to users (the offer of credits is quite lucrative) in this trial, then Tel Aviv could be in the race to be the first city to ever implement time, distance, place based congestion charging (Singapore is the other key contender at present).

It is fairly obvious from a policy perspective that this is the most optimal solution for any city, but the key limitation will be ensuring all users are equipped, at a reasonable price. Before they are, any such system must have a backup based on ANPR to capture those who are not equipped. However, it is early days yet. I look forward to seeing the results of the Tel Aviv trial, and hope that it forms the basis for an implementation that can deliver positive results for network management and users.

Israel gets windfall in privatisation of Cross Israel Highway

The Israeli government had indicated some time ago that it intended to embark on a programme of privatisation, including its 49% stake in Road 6 franchisee Derech Eretz Highways (1997) Ltd. The road, known variously as Road 6, the Cross Israel Highway or the Yitzhak Rabin Highway, is Israel's largest toll road, employing fully electronic free flow technology, with tolls measured according to the number of gantry points a vehicle passes.

Wikipedia describes the highway here, with the official website here in Hebrew.  It is 104 km long, started construction in 2002 and has a franchise through to 2029.

Derech Eretz's 51% private stake is held in equal proportions by Israeli companies Israel Infrastructure Fund and Shikun & Binui.  According to Israeli business website Globes, the government's stake had been valued at up to NIS550 million (US$162 million).

The price obtained is far in excess of that.  Globes now reports that Noy Infrastructure and Energy Fund has agreed to pay NIS1.4 billion (US$412 million) for the road.  It is the first investment from the fund which was established on 1 May. 

Globes reports further on the composition of Noy:

Noy Fund's partners in its winning bid for Road 6 include top investment institutions Psagot Investment House Ltd., Menorah Mivtachim Holdings Ltd. (TASE: MORA), Clal Insurance Enterprises Holdings Ltd. (TASE: CLIS), DS Apex Holdings Ltd. (TASE:DSAP), The Phoenix Holdings Ltd. (TASE: PHOE1;PHOE5), and Eliyahu Insurance Company. 

The other bidders oddly only wanted to buy part of the concession, making Noy the clear winner, and making it suddenly a key strategic investor in infrastructure.  

What must happen now is for the other two private investors to respond.  They must decide if they will match the offer of Noy to keep their respective proportions of shares.  They can do nothing, sell their stake to Noy Fund, or match it.  None of these will concern the government.  Indeed they will probably see the Noy bid as a boost in confidence in the future viability of the toll road.

Clearly, the view is that there is money to be made from this critical highway, which is Israel's major north-south artery bypassing Tel Aviv.  My question is whether Noy will be looking elsewhere to make further investments in toll roads.

Tel Aviv's private HOT lane shows signs of success

In January 2011, as reported here, the first HOT lane in Israel was opened, effectively providing additional lane capacity between Ben Gurion Airport and downtown Tel Aviv. The lane has been built by a private company, and offers the following options for users:

- Registering to pay, verified by Automatic Number Plate Recognition (ANPR) technology. The current price being 6 Shekels (U$1.75);

- Paying at toll booths manually;

- Vehicles with four or more occupants at peak times (three offpeak), have free access once verified at a toll booth (occupants are manually counted);

- Park and ride service, with a carpark at Shafirim Interchange and frequent free shuttles into the city (15 minute intervals typically, 5 minutes at peak times).

Buses and taxis have free access to the HOT lane.

According to the Jerusalem Post, the HOT lane is having some success, given it is running at near 80% capacity on average.   The HOT lane is able to introduce dynamic pricing, so that anyone about to select the lane will know in advance the price.  The intention being to maintain a minimum speed of 70 km/h.  The owner, Shafir Engineering, not only expects to use price to maintain free flow conditions, but actively monitor the lanes so that any breakdowns, accidents or other incidents can be swiftly cleared.  Indeed, its business depends on providing such reliability for its customers.

There are a wide range of interesting points about this HOT lane.

First is its quaint use of toll booths as a manual payment option, but more importantly to check vehicle occupancy! One of the problems of HOV and HOT lanes is checking vehicle occupancy, given the report indicates it takes up to three minutes to do that, surely the point must come whereby it is simply better value to scrap the occupancy exemption.

Secondly, the park and ride shuttle is an interesting adjunct. It presumably does not compete with pre-existing public transport on any great scale, but what it does do is offer an alternative for users that may not otherwise exist. Door to door shuttle bus services are capable of offering the convenience of taxis at a relatively low cost, and if this helps deliver better road pricing, then maybe such options (paid for by the toll) may be worth considering.

Thirdly, the electronic toll component is free flow, but using ANPR technology, not tag and beacon (otherwise known as DSRC). This is notable for the rarity in using such technology (without DSRC) for tolls, with only the congestion charging schemes in London and Stockholm, and the Northern Gateway toll road in New Zealand being ones I am aware of. 

Finally, it isn't simply a HOT lane, but a dynamic HOT lane.  As with several other global examples, such as the 91 Express Lanes in California, pricing can vary in real time based on demand.  In other words, a basic level of service is guaranteed, a notion virtually unknown in the road sector.

What the Tel Aviv Highway 1 HOT lane demonstrates it how new highway capacity, particularly on congested routes, can be viable built using private capital and tolling that specific capacity (in the form of lanes). Without detailed capital, operating revenues and cost figures, I can’t make an informed judgment as to its complete viability. However, it is offering choice, providing relief for the untolled route, and improving mobility. Perhaps its greatest limitation, beyond the odd use of toll booth checking for HOVs, is the issue with merging with the existing highway, which may require an engineering based solution (junctions must always have more capacity than the roads either side of them).

HOT lane opens in Israel

A new set of tolled lanes has opened parallel to 13km of Highway 1 in Israel between Ben Gurion Airport and downtown Tel Aviv according to the Jerusalem Post.  Buses, disabled drivers and high occupancy vehicles are exempt, but other vehicles can pay according to tolls which vary according to demand.  It will be dynamic, like some HOT lanes in the US, which prices varying between 7 and 25 NIS (New Israel Shekel) (US$1.98-US$7.06).   The target level of service is a minimum 70km/h, with prices highlighted at each end of the lanes so motorists can choose whether they are willing to pay the price.  The lane cost 400 million NIS (US$112.9 million), so it will take some time to recover

The private concessionaire responsible for the lanes is called Shafir Engineering, and it has also built park and ride facilities that connect with an express shuttle bus service.   The capacity is 1,500 vehicles an hour, although initial reports indicate demand being far below capacity (900 during AM peak).  Yet this may simply be a matter of the season and the need to expose motorists to the relative advantages of the new lanes compared to congested existing lanes.  As they get used to the concept, demand ought to lift.

Still, it is a form of congestion based pricing operating in Israel, managed by a private company.  It will be interesting to monitor progress in the coming months and years.