South Africa raises fuel tax, as tolls continue to be problematic

South Africa's Business Day has an editorial about the latest Budget which includes a ZAR0.30/l (US$0.02/l or US$0.08/US gallon).  Most of it is for general revenue, and the question raised by the editorial is whether the fuel tax in the country is a "sin tax" to punish private motoring.

The position taken by editor Mark Smyth is that if people do not have reasonable alternatives to driving, then it is a penalty.  However, he suggests that it would be preferable to ring-fence or hypothecate the new revenue, to address road transport issues.  The controversy over the Gauteng Freeway Improvement Project tolls is what causes particular concern, because SANRAL (South African National Roads Authority Limited) had long insisted that tolls were necessary to pay for that project because fuel tax would not.  Yet it appears the Government can increase fuel tax when it seeks additional revenue, which gives the not unreasonable impression that tolls are a specific target of users of the Gauteng highway network.

Fuel tax is an easy tax to collect, but if it is introduced explicitly just to collect revenue, it risks criticism simply because those who bear the greatest burden tend to be private motorists and road transport operators.  Clearly, if it is directly related to expenditure on roads  (as is widely seen in the United States) then it is seen as a user fee, so there is a direct link between what is paid and maintenance and improvements to the network.  However, it may also be imposed as an environmental tax, incorporating a price of CO2 or factoring in the impacts of noxious pollutants on public health.   Yet that has not been presented as a justification either.

The problem of fuel tax is that it isn't very good at advancing behaviour change.  It is an ideal carbon tax, as the implicit generation of CO2 does not have a geographic specific impact, so can be imposed more generally (and fuel consumption largely reflects CO2).  However, it is less than ideal as a pollution tax, because fuel consumption does not necessarily correlate to noxious emissions.  It is a poor user fee to reflect infrastructure costs, not only because it does not discriminate by location, but it is widely understood by economists as a poor proxy for wear and tear generated by vehicle axle loads beyond around 8 tonnes Gross Vehicle Weight, as diesel consumption does not increase sufficiently to compensate for this. 

Yet fuel tax has another problem, which is one of declining yields.  As fuel efficiency improves, the amount derived reduces and this tends to create an equity problem as those who pay the most will be those least able to afford the latest most fuel efficient vehicles. 

Given the controversy over tolls in South Africa, it would be timely for the whole field of motoring taxation and tolls to be investigated.  I think there may be better scope to move away from tolls on some routes and move towards a wider network road user charging system that can replace some fuel tax and the need for geographically specific tolls.   Whether this could be more acceptable is unclear, and of course it is critical that enforcement be addressed, but it would be more financially sustainable and may be more acceptable than location specific tolls.

South Africa's controversial toll system goes live - but faces serious non-compliance

To be fair, for personal reasons, I have neglected the issue of the Gauteng Freeway Improvement Project in South Africa, which undoubtedly has been the most controversial road pricing issue in Africa in the past year. It involves introducing free flow tolling on a 201km network of mostly upgraded and some new highways in South Africa.

Map of entire Gauteng Freeway Improvement Project including all toll gantries

I've written a few articles about this project in the past three years, including noting the risks of non-compliance, when tracing vehicle owners and fining them hasn't been fully developed.

Unfortunately, those risks weren't properly heeded.  I wish I hadn't been right, but I was, there are some serious problems - not with the technology, but with the business processes and preparation for the toll system's introduction.  

You'll find almost all of my articles about South Africa are about this project, by looking at this page and the older articles here (unfortunately I used links to SANRAL - the government's highway company - website for images which are no longer valid).

Tolling was launched on 3 December 2013 and whilst Kapsch, the well-known equipment and system supplier for the scheme, reported that the launch had been a success, there are other stories indicating some nuances to this.   It should, of course, have been technically successful, given the launch date was put back nearly a year.  Given it uses what is now (EU) standard DSRC 5.8GHz technology with ANPR cameras, it would have been a surprise had there been a major failure. 

However, the Times (South Africa) reports that there is a shortfall in revenue of just under R500m (US$48m) from recovery of overdue tolls.   Bills of around R543m have been sent but less than 10% have been paid.  It had cost R50m in debt recovery costs (around US$4.8m), of which R32.8 is postage and invoicing costs (US$3.1m) and the remainder in processing the invoice (from detection to identifying the vehicle owner).  

Therefore, in my view, whilst the on-road systems are working, the customer management function has been disastrous, not because those undertaking it are incompetent, or that the technology is wrong, but because adequate provision was not made for handling the human factors. So, motorists are by and large driving and ignoring bills, and the longer this goes on, the more they are going to do it.

News Briefs - Australia, Canada, Ireland, South Africa, USA

Australia – Survey says distance based congestion charge would change behaviour

According to AAP, reported by Perth Now, a survey from the University of Sydney has indicated that a distance based congestion charge of A$0.05/km (US$0.08 mile) at peak times could see 22% of peak commuters driving at different times (assuming a charge between 0700-0930 and 1630-1830) and 13% to shift to public transport.

The survey comprised 1000 adults. 66% said they had no flexibility to change travel times for commuting, but the other 34% said they did.

Obviously a survey isn’t a wholly reliable measure of behaviour, but what I find telling is the potential for time shift. Far too many think congestion pricing is about mode shift, when there is as much (if not more) to gain from changing time of travel to periods when there remains spare road capacity, which means getting optimal use of the network.

Canada - British Columbia debates road pricing

According to Straight.com, British Columbian Green Party leader, Jane Sterk, has come out in favour of "pay-as-you-drive" road pricing for Vancouver, to reduce congestion and raise revenue to pay for public transport.  The same article notes that the current Minister of Transportation and Infrastructure for the province, Mary Polak (Liberal), says the issue is up to the cities to come up with a proposal and convince the provincial government that it has public support, whilst the Opposition spokesman Harry Bains prefers to consider other measures first.  The general election for British Columbia is on 14 May.

Meanwhile, the Delta Optimist has published an opinion piece by Ted Murphy who says that road pricing is likely to be the best option:

It stands to reason those who put the greatest strain on the system, and those who are most likely to benefit from any improvements, should be the ones that pay the largest share of the tab.

Conversely, it doesn't make much sense for homeowners, who are an easy mark but don't necessarily tax the transportation network, to continually be gouged every time TransLink is in need of more cash.

There's much to be worked out when it comes to road pricing, and there will undoubtedly be resistance to the idea of paying to traverse roads that up to now have been free, but at the end of the day I suspect it will be the favoured option.

It's not a question of if, but how, they're going to extract more money from us, so they might as well do it in the fairest way possible.

It isn't clear as to whether British Columbia voters think the same way.

Ireland - manual toll booths add costs to trucking firms

The Independent in Ireland reports that toll booth barriers cost them on average an extra (Euro) 0.99c each time (US$1.30) in wasted fuel.  This is with DSRC toll tags that enable automatic payment, but require trucks to slow down to a crawl to trigger the lift of the barrier.

This is crazy of course. The M50 toll road in Ireland was converted to electronic free flow a few years ago, largely because of congestion (it being the ring road for Dublin).  There ought to be a transition towards at least a mix of free flow lanes and barrier lanes.

South Africa - 24 years to repay debts for Gauteng Freeway Improvement Project

Eyewitness News reports that the South African National Roads Authority Ltd has said that it will take 24 years of toll revenues to repay the debts incurred to build the Gauteng Freeway Improvement Project. This is based on the (R)30c/km (US$0.05 per mile) rate agreed by the Government.  The maximum monthly that can be charged is R550 (around US$61).

USA - Maryland - Intercounty Connector exceeds forecasts

At a time when there are more than a few examples of toll roads that have demand well below forecasts, it is perhaps good news to report on the InterCounty Connector in Maryland (Maryland Route 200), a fully electronic toll road that opened in 2011.  According to the Washington Examiner, estimates of 30,000 daily users by June 2012 have been exceeded on the western end of the road by September 2012 (to 35,000) and not far behind on the eastern end (26,000).  The road raised US$19.7 in the year ended June 2012 compared to projections of US$18.7 million.

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 - Australia, New Zealand, South Africa, UK, USA

Australia - Transport Reform Network calls for treating highways as utilities

Supply Chain Review reports that the cross-sector lobby group, Transport Reform Network (TRN), is calling for roads to be managed more like the electricity and water sectors, as a utility.  It was commenting in the context of a lack of funds to address problematic railway level crossings.  TRN suggests that any reform needs to look comprehensively at ownership and fuel taxes as well as tolls,  it is more concerned that talk of road pricing isn't about "bolting on" a solution to existing structures, but is part of a more comprehensive reform of highways across Australia.

This is quite enlightened and actually far beyond how most commentators, lobbyists and governments think of roads.

New Zealand - NZTA enforcing tolls against recidivist violators

The NZ Herald reports that the New Zealand Transport Agency (NZTA) successfully enforced a prosecution against a man who failed to pay NZ$5000 (US$4109) in tolls on the Northern Gateway toll road north of Auckland (the only state highway toll road in the country).  

Robert Masaberg was convicted in North Shore District Court of 20 charges of failing to pay a toll and was ordered to pay $1156 in fines, court and prosecution costs.He owes $5181 in unpaid tolls for the Northern Gateway Toll Road, unpaid administration fees and additional costs connected with attempts to get him repay his debt.

It was reported nearly two years ago that no one had been prosecution for non-payment, it is clear this policy has changed.  Three other prosecutions are to be pursued for evaders.   NZTA says the non-compliance rate for the toll road is 4%, which after four years of operation remains perhaps higher than would be expected.

South Africa - Times reports on allegations of poor practices by SANRAL

The Sunday Times of South Africa reports on a court case that claims the South African National Roads Agency Limited (SANRAL) has implemented the Gauteng toll system unlawfully, and in a way that is "disproportionately and unjustifiably expensive".  It undertook a three month investigation that raises questions about procurement practices that seem to favour certain suppliers, including a consultancy (TolPlan) that it claims has a vested interest in the promotion of projects as it works on the feasibility studies, tenders for development and engineering work on the projects.   It also claims that Kapsch won the tender for the toll system based on a minimum level of "black empowerment" shareholding of the firm set up for the contract, but has bought out most of that black shareholding (and will receive more revenue as a result).   Noting that the Kapsch led firm will receive around 25% of the tolling revenue (which if true, is comparatively high).   

The story is that it is a "cozy club" which implies a potential element of either corruption or sloppy mismanagement by SANRAL.  SANRAL CEO Nazir Alli admits that it "looks" like Tolplan had a conflict of interest by adjudicating on tenders and then working on the projects themselves, and another manager noted that SANRAL accepts consultancy recommendations "99%" of the time.

Clearly allegations of this kind raise opposition to tolling in the country, if the sense is that those promoting tolls are doing so out of personal financial interest.  The more that looks like being the case, the more damage is obviously done to plans to expand tolling the country, and damage both to SANRAL and those companies which engage in such practices with full awareness of what is going on.

UK - MP suggests tolling road to pay for maintenance

Whilst government considers reform of the highway sector, the Bournemouth Echo reports that one MP has floated tolling an existing road, that needs a £26 million (US$39m) major repair which is currently unfunded.  The MP is Chris Chope, who represents Christchurch and is from the Conservative Party. The road is the A338 Bournemouth  spur road, the main road from the east and north into the city.  The idea has been scorned, no less than because it would mean motorists paying to use an existing road, and risks substantial diversions of traffic onto parallel routes or dissuading visitors altogether.

USA - Pennsylvania - fully electronic tolling open option for congestion pricing

The self-styled "liberal" news-site Keystone Politics comments approvingly about the Pennsylvania Turnpike Commission's plan to convert manual tolls to fully electronic tolling, saying the key advantage (beyond removing people from "dehumanizing" work) would be to allow for higher tolls at peak times, to reduce congestion and encourage public transport usage.  The plan is to replace all toll booths over five years, and frankly the sooner the better.  

USA - Texas - toll tag options

The Waco Tribune has a useful article on toll tag account options in Texas.  It outlines how there are three toll road authorities in the state, each offering toll road accounts that are effective on all toll roads in Texas (TxTag, provided by Texas DoT. TollTag, provided by North Texas Tollway Authority.  EZ Tag, provided by Harris County Toll Road Authority.  It describes how non-tag toll prices can be between 33-50% more than tag product prices.  

News Briefs - India, North Carolina, South Africa, UK

Apologies these are a couple of months late

India - GMR Infrastructure looking to sell down toll road investments

GMR Infrastructure owns six highways in India, and according to MyDigitalFC it is looking to sell between 50 and 74% of its stakes in three toll roads.

The report says:

GMR Highways has three toll roads and three annuity roads under operation spanning around 421 km. Also, there are three annuity-based assets under development, totalling around 309 km.

Overall, the company has spent around Rs 1,800 crore (US$332 million) on these projects till now.

Besides there are two toll roads under development in Tamil Nadu and Karnataka aggregating to around 260 km.

The company plans to use the funds raised from the stake dilution to finance the Rs 8,000 crore (US$1.4 billion) Kishangarh-Udaipur-Ahmedabad mega highway project and also partially pare debt in the highways business.

North Carolina - Environmentalists oppose toll roads, because they are opposing new roads

NewsObserver reports that environmental groups are legally challenging new toll roads in North Carolina on the grounds that the need for them has yet to be demonstrated, and that new roads by definition cause environmental damage.

South Africa - Toll operator saves tree

The Witness reports that TRAC (Trans African Concessions), the private concessionaire, that owns and operates the N4 toll road, to relocate 1km of road away from a 200 year old tree.  The gist being that the company was willing to pay R1million ( US$112,000 ) to respond to public concern about the tree.


UK - Conservative Party MP floats reducing fuel tax replacing it with tolls

Andrea Leadsom, MP for South Northamptonshire, has proposed that there be more widespread use of tolls in the UK, and that such tolls should enable a reduction in fuel excise duty, according to the Daily Telegraph.  She is a member of the Free Enterprise Group of Conservative backbenchers who themselves support a more market oriented approach to highways.

Some statements from MPs include:
- Kwasi Kwarteng, MP for Spelthorne  said "Our approach is you should reduce fuel duty, which should reduce its impact. Getting private finance into this makes sense. To expect the taxpayer to pay for our roads without making any distinction between those who do and don’t use it is unfair. I think if there was a real debate we could see a cultural shift.”
- Charlie Elphicke, MP for Dover was reported saying ""The M6 toll has been relatively successful,' he said. Mr Elphicke added that private finance should not only be used for new roads but tolling should be considered where existing roads are widened. "While public finances are in the state they are in, it is something worth looking at."
- Mark Pritchard, MP for The Wrekin said: "Toll roads have a part to play in a mixed economy of of providing new roads as long as there are safeguards about the financial viability and the prices are kept affordable.”

Of course I agree, but it needs to be more strategic, a more comprehensive new deal for motorists that engenders trust in pricing, which simply doesn't exist now.

News briefs - Australia, Florida, Indiana, Ireland, New Zealand, Philippines, South Africa, Virginia

Australia - Sydney to pursue three new toll funded highways

The Australian Daily Telegraph (via the Herald Sun) reports that the New South Wales State Government’s 20 year infrastructure strategy includes three new major highways in Sydney which are proposed to be funded through tolls, including reforms of existing tolls toward distance based pricing.  Let’s be clear this does not mean a change in technology or full network based charging, but by setting the tolls on toll roads at rates to reflect the distance between tolled points on the network.  The price is estimated to be A$10 billion, although it is thought the price could be lowered by private sector innovation and cut and cover construction techniques. 

The New South Wales Government has been studying options for reforming tolls in the Sydney metropolitan area, to normalise what vehicles pay across the tolled network to reflect distance.  The logic seems simple, but the difficulties are around addressing the costs of different concessionaires, as the motorways that have been built had different construction costs (e.g. tunnels are far more expensive than more rural highways).

Florida - Customers paying in high denomination banknotes can be detained at booth

According to the Newspaper.com, in the case of Chandler vs. Florida Department of Transportation, the US Court of Appeals has found that "Motorists can be held indefinitely at toll booths if they pay with large denomination bills".

The report says: "Under FDOT policies in place at the time, motorists who paid with $50 bills, and occasionally even $5 bills, were not given permission to proceed until the toll collector filled out a "Bill Detection Report" with data about the motorist's vehicle and details from his driver's license".

The court decision, responding to a claim that it was a constitutional violation to stop the vehicle from proceeding is as follows:

"In Florida, a person's right and liberty to use a highway is not absolute; it may be regulated in the public interest through reasonable and reasonably executed regulations."

The judges found it was reasonable for Fanueil to set regulations for use of the road -- including the types of acceptable payment. The court decided that drivers implicitly agreed to those conditions by choosing to use the toll road.

Florida - State Road 408 collects 43% of all toll revenue of the Orlando Orange County Expressway Authority.

The Orlando Sentinel reports that the 22 mile long SR408 toll road generated $108 million in 2011, or 41% of the Orlando Orange County Expressway Authority's total revenue.  It carried over 126 million toll transactions in that year and its revenue effectively cross subsidises the rest of the Expressway Authority's network.

Indiana - toll road privatisation touted as success

According to the Newark Advocate, Michael Cline, Indiana Department of Transportation commissioner, has been touting the successes of the privatisation of the Indiana toll road.

He said that the lease paid off old debt and provided "millions" of dollars to counties the road passes through to complete major projects including the extension of Interstate 69 from Evansville to Bloomington and Indianapolis and the reconstruction of U.S. 24 between Fort Wayne and Toledo "dubbed the highway of death for its high number of fatal crashes".

He claimed it "made sense for Ohio to study a similar plan for its section of the toll road".

The report said:  

The Ohio Department of Transportation is conducting a $3.4 million study with Texas-based KPMG Corporate Finance LLC to examine the ways to maximize the financial benefit of the toll road for the state. Jerry Wray, ODOT director, said the study will be completed by mid-November and he hopes to have a recommendation to the state legislature by Jan. 1.

During Cline’s presentation, he tried to eliminate some myths about the Indiana Toll Road lease, including that toll rates have doubled since 2006. Although the cost to drive the entire stretch across Indiana has risen from $4.65 in 2006 to $9.40 this year for drivers paying cash, tolls have remained frozen for drivers using electronic toll pass technology. Those rates can’t increase until 2016.

Tolls for many Ohio drivers have risen at higher than the cost of inflation during the past two decades. The turnpike operates entirely on its own revenue. It had $11 million in profits last year, and turnpike officials previously stated that more can be found through savings.

It is helpful to have this sort of information, because it is easy for privatisation advocates and opponents to both use slogans and cliches to justify their positions.  The best thing for Ohio will be to weigh up the evidence of what went right and wrong in Indiana, but it seems like a balanced approach has been taken that suits the needs of that state.

Ireland - Sacyr looking to offload debt ridden toll roads

The Independent (Ireland) reports that Spanish owned toll road concessionaire Sacyr is looking to sell its toll road concessions in Ireland.  Infrastructure fund Globalvia is said to be interested in these assets.  The concessions in Ireland are:
- N6 (56km motorway/dual carriageway between Galway and Ballinasloe, with a 7km connection to the Loughrea bypass);
- M50 Dublin (operation and maintenance contract for the 41km of Dublin's part-ring motorway);

New Zealand - unprofitable toll road gets revenue boost but still not enough

According to the Bay of Plenty Times, the Route K toll road has seen a 37% increase in revenues following a 50% increase in the toll for cars.  However, it still remains insufficient to cover the interest costs on the debt of the local authority financed road.

Philippines - Two new toll roads to be pursued in 2013 and Metro Pacific to expand Northern Luzon Expressway

Rappler reports that:

The CALAX project, which will connect the Manila-Cavite Expressway (CAVITEx) and South Luzon Expressway (SLEx), will be among the two projects under the Public Private Partnership (PPP) scheme the Department of Public Works and Highways (DPWH) will pursue in 2013. The PPP section is the 36.01 km length of the expressway from Kawit, Cavite to Sta. Rosa, Laguna. The ODA section is the remaining 11.01 km part of the road from Sta. Rosa, Laguna to SLEx at Mamplasan Exit in Laguna.

"The private proponent shall be responsible for the financing, designing and constructing of the PPP section, and the subsequent operations and maintenance (O&M) of the entire CALAX," the PPP Center explained.

The project is estimated to cost US$1.01 billion.

Meanwhile, Rappler also reports that Metro Pacific Investments Corp  is allocating P2.5 billion (US$61 million) in 2013 to expand and repave parts of the Northern Luzon Expressway.  This includes a P1.6 billion-worth (US$39 million) toll road that will link NLEx Cloverleaf and McArthur Highway near the Valenzuela City Hall with a 2.1-kilometer, 4-lane highway. Depending on how fast the government is in securing right-of-way, construction for Segment 9 will likely start by November or December and will be completed in 2013

South Africa - Gauteng e-tolling allowed, Moody's approves

According to Business Day Live (South Africa), the decision by the Constitutional Court of South Africa to allow the implementation of electronic free flow tolling as part of the Gauteng Freeway Improvement Project, will make a substantial difference to SANRAL's financial position.  Tolling on the project was due to be implemented in April 2012, but was stopped due to a court injunction.  The tolling has been opposed in South Africa on various grounds, but which largely appear to be about the injustice seen in tolling existing as well as new roads, because the existing roads have been upgraded, and because of fears of corruption in the contracts with the foreign suppliers of equipment and tolling services (which have not been substantiated).  The delay has cost SANRAL US$309 million since April.

The report outlines how taxpayers have been providing bridging finance to SANRAL to cover the gap:


Government responded by providing the roads agency with R5.8bn in funds to compensate for the lack of e-toll revenue and to defray operating costs, including debt service payments on the GFIP debt, a large proportion of which government guarantees.

Moody’s said the GFIP was mainly responsible for the rapid surge in Sanral’s debt, which rose to R37.5bn or five times its 2012 annual revenue as of August this year, from R6.2bn in March 2007.

Moody’s downgraded Sanral’s rating to Baa2 from Baa1 in May due to negative pressure on the roads agency’s liquidity.

The rating agency noted that at the end of June, Sanral’s cash reserves and government’s funds totalling R7.1bn were sufficient to cover operating expenditures and short-term obligations, including debt service, over the next 16 months.

Moneyweb reports further on SANRAL's financial position.

Virginia - I-95 HOT lane contract criticised, but doesn't tell the full story and I-495 express lanes about to open

The Newspaper has published an article critical of the PPP contract between the State of Virginia and TransUrban for the I-95 HOT lane project.

The reasons it cites are:

- It is a 73 year contract offering revenue to the concessionaire with no new lanes being added; 

- Casual carpooling will be dissuaded, as all carpoolers (only HOV 3 – meaning at least three people must be in the vehicle to be eligible) must use an EZ Pass tag to “declare” their presence. Those without will be fined; 

- If more than 35% of lane users are HOV (i.e. not paying tolls), the state must pay for each additional HOV vehicle an equivalent to 70% of the tolls that would have applied The state must pay an amount equal to 70% of the toll that would apply TransUrban if more than 35% of lane users are HOV (i.e. not toll paying); 

- If the State wants additional lanes, it must first negotiate an addition with Transurban. If it decides not to adopt an approach including Transurban, it must compensate the firm. The same applies to additional capacity on specific parallel routes. 

- Two-thirds of the project's financing is backed by taxpayers. Virginia is providing US$71 million in grants and US$242 million in revenue bonds. US$300 million comes from the Federal Government with a TIFIA loan.

Certainly it appears like Transurban has a good deal, although it doesn't look that good if traffic levels are flat, and there is a low volume of users with less than 35% of road users being HOV not toll payers.  That's the risk Transurban carries.  If car pooling takes off (which the article suggests is less likely because of the inconvenience of getting an EZ Pass tag), then it will be positive for the state (and users of the existing lanes), and will be because Transurban has encouraged it.   However, it is also understandable that Transurban gets first right of refusal to build new capacity, and that if taxpayers pay for new capacity elsewhere, Transurban gets compensated.  Such is the environment of privately owned lanes vs. government owned lanes. 

Furthermore, the article is plain wrong in asserting no new lanes are being provided.  In fact there will be some new lanes, and some extensions to existing lanes.  The press release announcing Transurban has won the extension specified these, and after all, it does not cost $940 million to do a HOV-HOT lane conversion.  There is a lot of new construction to make these lanes a more complete corridor congestion bypass system.   If you were paying for such improvements, you wouldn't want the state to be suddenly paying for parallel ones to enable motorists to bypass your improvements (and the tolls you need to recoup the costs).

Meanwhile, WAMU reports that the I-495 express lanes are due to open on November 17th.  The report says:


The two new lanes in each direction spanning 14 miles between the Springfield interchange and the Dulles Toll Road will be E-ZPass only.

Everybody needs an E-ZPass to use the express lanes. Carpools need the E-ZFlex for the toll-free trip. So far the Virginia Department of Transportation says signups for E-Z Pass are going well in the local area.

Stewart Schwartz, the executive director of the Coalition for Smarter Growth, criticises the project claiming that it will result in induced demand, filling up the space from vehicles shifting to the express lanes.  This has long been a criticism of any projects involving building new highway capacity, but in an environment where traffic growth has stabilised and there may be a long term trend of flat traffic, does this hypothesis still apply?  If so, does it matter if the new capacity is being charged to ensure it remains efficiently used?

News briefs - Australia, China, Indonesia, North Carolina, Ontario, South Africa

Australia - Chair of Australian Competition and Consumer Commission advocates congestion tax

According to the Herald Sun, chair of the Australian Competition and Consumer Commission (ACCC), Rod Sims, says that congestion charging, carefully managed, with some money used to support public transport, would make a meaningful impact on congestion and help provide funding to support infrastructure development.  He was making this point at a speech at the John Curtin Institute of Public Policy in Western Australia.

The ACCC is Australia's competition and consumer law enforcement body.  Although it has no specific role in its area, to have a highly placed officer of this body, responsible for consumer advocacy, raising this point adds to the growing number of views expressed in Australia supporting congestion pricing.

China - government declares certain public holidays to be toll free

China's introduction of toll free public holidays has had a mixed response according to state newspaper Global Times.

The report said:

The State Council approved a plan on August 3 to lift toll fees on passenger cars with no more than seven seats during four national holidays of Spring Festival, Tomb-sweeping Day, Labor Day and National Day.

This year's National Day holiday coincidently comes the day after Mid-Autumn Festival, which is governed by the lunar calendar, creating an eight-day national holiday. The State Council has ordered that passenger cars be allowed to travel free on the country's toll roads from September 30 to October 7.

Given China's toll roads are mostly privately owned, the issue has been whether the law has been consistently followed by the private road owners.  People were sceptical that the toll free period would come into effect, and the key reason it was introduced appears to be populism.

The toll free period started at midnight, resulting in large volumes of traffic travelling after that time.  It is not entirely clear from the reports, but it appears that few measures were adopted for traffic management at toll plazas, as the tolls still applied to vehicles with more than 7 occupants.  So vehicles would queue at toll plazas to be quickly flagged on.  One wonders why it would not have been easier to make all vehicles exempt and to have confined the traffic lanes at plazas to a number that avoided the use of plazas to cascade and then merge traffic flows.

Indonesian Government to create new toll road concession company

The Jakarta Globe reports that Indonesia's State Enterprises Minister, Dahlan Iskan, wants state construction company, Hutama Kurya, to become a toll concessionaire.

This would duplicate Jasa Marga, Indonesia's existing state-owned concessionaire, which reportedly has welcomed the move (presumably because it isn't about competition, but about capacity) and will help the company enter the sector.  The report claims that Hutama Kurya will be pursuing new toll roads in Sumatra

Meanwhile, another report notes that Jakarta TollRoad Development, a consortium that includes Hutama Kurya, has raised additional capital from PT Jaya Real Property (JRPT) and PT Jaya Konstruksi Manggala Pratama (JKON), which are part of the Pembangunan Jaya Group, the operator of Ancol Dreamland amusement park in North Jakarta.

JTD is a consortium of PT Hutama Karya, PT Pembangunan Perumahan (PP), PT Wijaya Karya (WIKA), PT Adhi Karya (ADHI) and PT Citra Marga Nusaphala Persada (CMNP).

One project that the firm plans to bid on is a 67-kilometer-long toll road that will connect all five of Jakarta’s municipalities. Based on previous reports, the project will require a total investment of Rp 40 trillion (US$4.19 billion).

North Carolina looking beyond fuel taxes

Business Journal reports that North Carolina Secretary of Transportation Gene Conti has said that the future of highway funding for the state is likely to be tolls and vehicle mileage tax, rather than fuel tax.  A key reason appears to be that the state has one of the highest fuel taxes in the US.  

Ontario to help build toll road for access to mining region

In some countries, developers ask the government to pay for and build the roads to gain access to land they want to develop.  In Ontario, the provincial government has said it will help do that, but will charge all road users to use it according to Wawatay News Online.  The project is intended to be a 300km new road to access an area called the "Ring of Fire" which is rich in mineral deposits.  It is not intended to be a public road, but a road purely for shifting cargo and for access to the mining developments, but is intended to be fully self funding by providing access to all of the adjacent mining claims.

South Africa - Cape Town and SANRAL disagree on tolls for new road proposal

IOL news reports on how a proposed new road in Cape Town, the R300, is showing up the split in policy on tolling in the country.  On the one hand, the City is promoting the road, but not as a tolled route. The City of Cape Town is against tolling on principle and is seeking a "new model" for funding major road plans.  However, national highways company, SANRAL is proposing that it be a toll road.  In any case, there isn't funding for the project at present.

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.
 

Marxist position on tolling

For the weekend, I thought this article, apparently based on a Marxist view of economics (but I would not dare suggest it is a particularly authoritative one), would be a curiosity.

It is written by Irvin Jim, General Secretary of the National Union of Metalworkers of South Africa.  I wont bother rebutting the arguments made here, since they are well off my scale of having anything to do with economic efficiency, but are all about “from each according to his ability, from each according to his means”. 

 

He advocates highly progressive income tax as a way to pay for roads. Draw your own conclusions of the logical consequences of such an approach on demand for road use and cross subsidies from those who use roads the least to those who use them, wear them out, congest them and pollute from them the most.

News Briefs: Gothenburg, India, London, South Africa, Toronto

Gothenburg

Further to an earlier report, a press release from the firm has confirmed that Q Free is supplier for delivery of road side equipment, infrastructure and service and maintenance for 2 years with an option for additional 6 years for the forthcoming Gothenburg congestion charging scheme.  The price is NOK 143 million (US$25 million).

India


Fitch ratings has released its latest report on Indian toll roads.  Highlights include:
- First-year actual traffic levels are a strong indicator of the accuracy of traffic forecasts and hence of a project's economic prospects;
- Traffic volume forecasts are systematically over estimated, because of sponsor bias, lack of data and lack of analytical rigour.  Some cases see traffic 45% below forecasts.
- High inflation has meant inflation-proof toll increases have mitigated low demand, but demand elasticity responses to ongoing increases are unclear;
- Most projects are highly leveraged so highly susceptible to failure to meet forecasts;
- Even given short term pressure, most projects retain long term capability to service debts;
- More recently some concessionaires have been allowed to toll completed segments once 75% of a project is completed, which mitigates some of the current challenges.

London

The Evening Standard reports that embassies in London have now accumulated unpaid charges and fines for London's congestion charge worth a total of £58 million (US$91 million).  Those that do not pay claim it is a tax, so diplomats are exempt from paying it.  However, some embassies do pay.  The biggest debtor is the United States, which owes £6.1 million, followed by Russia, Japan and Germany.   Curiously a website from the Liberal Democratic Party claims that the US embassies in Oslo and Singapore do pay the toll and road pricing charges in those cities, but then again Oslo is clearly a toll paying for specific roads, and Singapore road pricing is also a charge metered on usage.  Maybe the next major change to the London scheme should be to render it more similar to the others?  Of course in Stockholm, foreign registered vehicles are exempt, so making that comparison is not possible.   Around 50 embassies refuse to pay in London.  Of minor interest to me is that my country of birth, New Zealand, does pay, but Australia doesn't.  This link shows a list of those who have not.  Curiously as well, South Korea doesn't pay, but North Korea does (or doesn't drive into central London at charging times)!

South Africa

There continues to be extensive debate about tolling in South Africa, with two recent reports indicating strong political resistance to expanding tolls. One report from the Independent Online claims that the KwaZulu-Natal (a South African provincial government) Department of Transport will continue to oppose plans to introduce tolls on roads along the “Wild Coast”. Meanwhile the City of Cape Town is reported to still be interested in taking two cabinet ministers to court following plans for tolls to be introduced as part of improvement proposals for existing highways in the city (the Winelands project involving the N1 and N2) from the South African National Roads Agency Ltd (SANRAL).  The City is claiming that SANRAL did not adequately address its concerns through its disputes resolution process.  There is another political dimension here.  Cape Town is governed by the Democratic Alliance (DA), South Africa's leading opposition party (the national government is of course governed by the ANC).  This battle is, in part, about the DA challenging the dominance of South Africa's ruling party.

Meanwhile, the trade union federation COSATU has been driving protests against tolling, but this article from South Africa Report doubts the union will achieve its aims.  It says that COSATU's position is "rooted in its opposition to privatisation" and it presumably sees user pays as part of that (and reflecting that SANRAL is a commercial, although state owned, company).   It also highlights some debating points from Deputy Transport Minister, Jeremy Cronin, of the South African Communist Party, who makes some interesting points arguing why tolls can be justified.  One such point being that the alternative is general taxation, with everyone, including those who cannot afford a car, paying for what is a facility predominantly used by the relatively affluent.   Another being that if tolling is to promote mode shift, other modes must be available and be of good enough quality.

IT Web South Africa reports that the toll cap for the Gauteng Freeway Improvement Project only applies to vehicles paying with a tag and beacon account, not those paying through ANPR detection.  The articles also describe how the opposition Democratic Alliance is opposing tolls, and how SANRAL is dealing with misinformation about payment options.

Toronto

The world's first fully electronic free flow toll road (ETR 407) is to be extended with the Highway 407 East project.  It will be extended in two phases, the first a 22 mile extension east to Oshawa, the second extension to Highways  35/115, according to the Montreal Gazette.  SNC-Lavalin has been named as the preferred consortium to design, build, finance and maintain the tolled extension.

Gauteng tolls to start April 2013

I’ve written before about the controversial decision by the South African government to toll a whole network of upgraded highways in the Gauteng region, to fund the construction of new highways and widening of existing ones. It is controversial because it involves tolling previously untolled sections of highway.

IOL reports that the South African government intends to implement all legislation necessary to let the Gauteng Freeway Improvement Project tolls to come into effect. This includes making non-payment of tolls as civil offences.

Transport Director General George Mahlalela is reported as saying:

improved roads had huge benefits to Gauteng motorists, because instead of the two-hour travel it would take them 30 minutes. He added that other advantages of improved roads were less fuel usage and less congestion.

“What we are saying to the people of Gauteng is that what you lose on the tariffs you pay, you gain back on the other side. In real terms you are not losing much on this toll roads,” he said.

The Sowetan explains the prices:

Prices will be 58c (US$0.08) per km for cars without DSRC tags, but only 30c (US$0.04) for those with tags.  Small trucks will pay R1.45 (US$0.19) per km without tags and R0.75 (US$0.10) with tags.  Heavy trucks will pay R2.90 (US$0.38) per km  without tags and R1.51 (US$0.20) with tags.  There are also tolls for motorcycles.  There will be a cap of R50 per month (US$6.58).

Heavy vehicles can gain a 20% discount if they use the highways off peak.  Buses and taxis will be exempt.

Full details of the Gauteng Freeway Improvement Project are now on its dedicated website.  The tolls are at a lower level than first estimated, as the government has decided to part pay for the highway improvements from general revenue of US$764 million.

The Business Day column in the Independent Online  (South Africa) says the government has taken an "elegant solution" saying it supports user pays:

This sends an important signal to local and international private investors that the government’s handling of infrastructure development allows for the levying of fees, which helps them recoup their investments in such projects.

The user-fee principle is universally accepted and has been applied with great success for toll roads in South Africa and the rest of the world. Most infrastructure projects rely on this user-fee business model to convince investors, like pension funds, to come aboard.

It is pleasing that tolls are proceeding, but the concessions needed to get some degree of public approval have been considerable (and the unions remain unhappy).  It is true the highway improvements will be considerable for South Africa and tolling is an efficient way of paying for it, but I suspect what will be needed is for more off peak rates and peak charges to compensate for that - given that the main beneficiaries of the improvements are peak users that no longer face the congestion the improvements are meant to relieve.

South Africa revisiting future toll projects

Bizcommunity reports that South African Transport Minister Transport Minister Sibusiso Ndebele has said that tolling urban roads is up for "re-discussion" and the government has effectively slowed down progressing new projects, following the controversy over the Gauteng Freeway Improvement Project.

He said a city or provincial government should never make decisions of such national consequence again, indicating the government is a bit burnt by the political fallout from the issue. Although he insisted that project was essential, the report said: "any further e-tolling proposals would have to be properly discussed so that users understood the implementations and this included the second phase of the GFIP and the proposed Cape Winelands Toll Road."

I would guess that future toll roads that involve tolling existing roads are less likely for now, which suggests that South Africa may have to think about future tolling that is network wide and involves reducing other taxes as well.

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.

South Africa's next tolling battle

If you’ve been following the issue of tolls to fund the Gauteng Freeway Improvement Project, you’ll wonder if South African politicians would have the appetite to introduce more toll roads. After all, although tolling is meant to start on the Gauteng network by February 2012, the second phase of the project has been suspended (upsetting road contractors).

People in Cape Town are surprised that the answer is yes. The government plans to toll the N1 and N2 highways between the city and Worcester and Bot River to fund upgrades to both roads. In other words existing untolled roads will be tolled to pay for upgrades on them. People in Cape Town and the local government are opposed. The intention is to operate the toll as a 30 year concession with the upgrade costing R10 billion (US$1.26 billion).

The project covers 170kms of road and involves building around 170 culverts and bridges, widening some sections to six lanes; drilling a tunnel through Sir Lowry’s pass, and flyovers at two points on the N2 through Somerset West.

Business Day’s Cape Editor Dave Marrs says it is unjustified because “ imposing tolls on outlying commuter suburbs in the manner proposed will have a disproportionately negative effect on the poorer communities of the Cape Flats, both through direct transport costs and the knock-on effect of higher consumer good prices” and as there is little congestion on the routes, it is "difficult to justify on those grounds".

South Africa’s leading opposition party, the Democratic Alliance, is leading a campaign against the proposed toll upgrade.  The Financial Mail reports that the City of Cape Town:

declared an inter governmental dispute process with Sanral in July. It has asked that the process be halted until concerns that it has raised have been addressed.

The intention to pursue legal action, says Cape Town’s mayoral committee member for transport, roads & stormwater, Brett Herron, arose after Sanral announced the project’s preferred bidders.

The preferred bidder is the Protea Parkways Consortium, a joint venture between Group Five, Basil Read and French company Bouygues TP. 

Once the road has been upgraded, 30% of the operation and maintenance work is reserved for black companies in the first half of the 30-year concession and 80% in the second half of the concession contract according to SA Commercial Prop News.  Work is meant to begin in February 2012.

Clearly, there is a big issue.  Columns like this, which just condemn tolls, are ignorant. If tolls are a tax, then so are fares on buses and airport charges. There is no need for toll booths to collect modern tolls and the assertion about how much money it costs to collect tolls is exaggerated. The main beneficiaries of improved major highways are those using them. Those without cars shouldn’t have to pay as much as those with cars.

However, for the South African Government to have got things this wrong, indicates disenchantment with how existing motoring taxes are spent, and insufficient engagement with motorists on highway upgrades (and the tradeoffs between paying tolls and not getting improvements).   SANRAL, the South African National Roads Agency Ltd, is one of the best highways operators in the developing world.  The proposals for tolled improvements have enormous potential to secure a first class highway network for the country, but that in itself isn't enough when people don't trust the system as a whole.   As such, it may be time for South Africa to review not only its tolling policy, but its entire road taxation and charging policy.