Climate Action gives congestion charging a qualified tick

The Climate Action website (associated with the UN Environment Programme) has published an article by Alan Bouquet reviewing congestion charging.   Given the website's primary interest is reducing CO2 emissions, it understandably take a fairly limited view of congestion pricing as a tool, but I am glad that it is promoting it as a positive.  Given congestion pricing simply reduces traffic flows on congested routes by pricing some vehicles off the road, it is understandably popular with those seeking to reduce use of cars.

The article states the obvious ways of introducing congestion charging as:

• A cordon area around a city center, with charges for passing the cordon line
• Area wide congestion pricing, which charges for being inside an area
• A city center toll ring, with toll collection surrounding the city
• Corridor or single facility congestion pricing, where access to a lane or a facility is priced.

The cordon and toll ring examples aren't exactly different, and it ignores multi-zonal or distance based pricing - the option with the best potential to target roads with optimal pricing.  

The negatives it cites are that it is "not equitable" (but doesn't explain why), that it "puts a burden on neighbouring communities" (only if it is a blunt badly designed cordon), that it "affects retail businesses and the economy and is another form of tax" (which can be true if badly designed and if the revenue collected is not wisely used).

The article claims there are "many unanswered questions". These are worth testing:

"Significant investment in public transport is required to offset the loss of commuters using cars. For the system to work, viable alternatives must be in place"

I disagree. For a start not everyone priced off the roads at peak times are commuters, but people who can travel at other times. Secondly, it can price people onto other routes and to other destinations. Estimates in London are that a third of motorists changed time of travel or route (some simply avoided driving through the centre), a third changed mode and a third didn't travel at all (combining multiple trips into one trip). Public transport needs to be able to operate more efficiently and meet increases in demand, but often it is also underpriced as well. Congestion pricing raises the bigger issue as to addressing the fundamental pricing problems in urban transport.

"The funds raised from the charge are not always put back into improving transport, which is a major criticism of the scheme."

Given there are only three major schemes (Singapore, London and Stockholm), this criticism is only valid in Singapore, but isn't a big issue there. The funds could be used to offset other motoring taxes quite legitimately. It does help for money raised to be used to improve transport or reduce other taxes, rather than simply be a windfall.

"The process of charging raises inequality questions. Middle class and high earners are more likely to be able to afford the charge, possibly raising unemployment among the lower classes."

This is why part of revenue raised should be used to offset cutting other taxes, which can address this. However, any charge which raises unemployment is poorly designed indeed.

"Referendums on whether to implement charging or not, like in Stockholm, show that those outside the city are against the charge, while those in the city are for it."(sic)

There have been three referenda on congestion charging. Stockholm's result was as described, but in Edinburgh and Manchester the vote was overwhelmingly negative, with majorities against across the board. That statement has little validity.

The article concludes that congestion charging can work "it also enables a cleaner flowing city, if implemented with masses of investment in alternative methods of transport."

However, that is a narrow way of looking at congestion pricing. It is only partially about promoting mode shift, but also significantly about time and route shift. Congestion pricing can enhance the viability of existing services, and can justify improvements, but it requires a deeper investigation of impacts than simply assuming mode shift.

India has toll plaza congestion - any chance of a technical solution?

The Times of India reports on chronic congestion at toll plazas in New Delhi. The concern being that delays at the 32 lane toll plaza on the New Delhi-Gurgaon Expressway should be resolved by the concessionaire - DSC Ltd. The website describes the toll plaza as:

At Delhi Gurgaon Border the Gate way to Haryana, Border Toll Plaza featuring 32 lanes built on international standards provides a smooth entry to State of Haryana.

One idea has been to introduce congestion pricing on the toll road, which of course might help (the existing toll structure is here) but the real issue is simple - manual tolling on high capacity highways cannot efficiently handle the full capacity of the road. It already has a DSRC system enabling bypasses of toll queues, but the issue is whether it is priced or managed well enough to encourage a major shift in behaviour.

A press release indicates some steps have been taken, although frankly these are standard practice elsewhere. Faulty tags should be replaced as a matter of course, and tag costs should be subsidised over time, because of the cost savings they offer.

For a road reportedly handling 200,000 vehicles a day, it should have the majority of trips using a tag based system. Indeed, as India grows, it will be obviously unsustainable to continue to push tolling on a manual basis, as the costs of toll plaza bottlenecks will be a brake on growth.

India badly needs to develop a medium to long term approach to avoid this.   That means looking at number plates, DSRC technologies and interoperability, and taking a market led approach.  The scale is considerable, but the medium to long term benefits are potentially considerable.

Skanska sells half of Chilean toll road

Swedish infrastructure investment company Skanska has sold half of its shareholding in Chilean concession toll road Autopistas de Antofagasta according to Cision Wire.  The price was US$43 million (a US$9 million profit) and Skanska is retaining a 50% shareholding.   The buyer is Inversiones Infraestructura Dos S.A., a Chilean company owned by two investment funds managed by Las Américas, an investment funds manager belonging to PENTA (a Chilean group).

The project is under construction and due to open in December 2012 including 120km of new road and 200km of road upgrades.  It is in a fast growing mining district of Chile.  More details are in the Autopistas de Antofagasta annual report 2010 in English here.

Tolls on Seattle SR 520 will "halve demand" says study

I wrote recently about the proposed tolls on the SR 520 floating bridge in Seattle.  The bridge is to be replaced, with tolls imposed on the current bridge to help fund the work.

SR520 in blue will be tolled. I90 beneath it will not be tolled

Now the Seattle Times reports on the study compiled to prepare construction bonds for the project which claims that traffic will drop from around 100,000 vehicles a day to around 52,000.  The reduction is due to some suppressed trips, mode shift to public transport and diversion to Interstate route 90.   So the tolling will effectively deal to congestion, with traffic levels not returning to pre-toll levels until 2032.  The tolls will pay back a US$1 billion bond (total cost is US$4.65 billion for the bridge) and generate more than enough revenue to support it.

Curiously, the report also states that if equivalent tolls are placed on the I-90, then toll revenues on SR 520 increase by 38% - because the diversionary route is no longer more attractive.  State Treasurer Jim McIntire is confident that toll revenue will support the proposed bonds.   It's worth also remembering that the proposed tolls in include congestion pricing at peak times, a trend that is appearing more regularly on new toll facilities in the US, and a very welcome one to aid sustainable use of the infrastructure and to maximise revenues.

Indonesia to start more toll roads in 2012

The Jakarta Post reports that the Indonesian government is to call tenders for construction of six new toll roads across the country, at a cost of Rp 77.69 trillion (US$9.1 billion).  The report is somewhat confusing, as it claims there will be six toll roads added to Jakarta, and then lists five outside Jakarta and one within.  All in all, what it does mean is that Indonesia is continuing to build a network of toll highways in and beyond Jakarta.   The claim is that they are built by PPPs, but I am not so sure there is that much "private" in some of them, although they are certainly commercial.

Projects listed are:

- Jakarta Outer Ring Road NorthWest part 2 (7km) is to be built by a joint venture between state owned toll operator PT Jasa Marga and provincial government property company PT Jakarta Propertindo

- Cikampek-Palimanan (West Java but east of Jakarta) (116km) is to be built by PT Lintas Marga Sedaya, Malaysian (ultimately state owned) highway concessionaire PLUS (which owns PT Lintas Marga Sedaya) and PT Baskara Utama Sedaya for Rp 11.35 trillion (US$1.28 billion);

-  Cileunyi-Sumedang-Dawuan (West Java, east of Bandung) (60km) to be built by the Ministry of Public Works and an undecided private firm for around Rp 9.63 trillion (US$1.08 billion);

- Pejagan-Pemalang (Central Java) (57.5km) is managed by a dedicated company called PT Pejagan Pemalang Toll Road which is seeking partners to build the project for around Rp 5.51 trillion (US$622 million);

- Gempol to Pandaan (East Java south of Surabaya) (13.6km) is to be built by PT Jasa Marga for around Rp 1.16 trillion (US$131 million); and

- Medan-Kualanamu-Tebing Tinggi (Sumatra) (60km) is to be built by the Ministry of Public Works and a yet to be identified private partner for around Rp 6.23 trilion (US$703 million).

Tolling in Indonesia remains dominated by manual cash tolls, but the extent of toll road development is such that it must present opportunities to modernise the nascent network.  One of the interesting development in tolling in developing countries is how largely isolated the major developing country economies have been in developing and running toll systems.  China, India and Indonesia have all developed systems and business rules independently, with little cross fertilisation between each other, or indeed from major developed country operators.   How long before this fractionated sector starts to consolidate?

India pushing untolled roads as new priority

The Times of India reports that the Ministry of Road Transport and Highways (responsible for policy) has requested that the National Highways Authority of India to focus on contracting 3,000 km of untolled road projects. The focus to date has been on PPPs that are tolled or contracted, which has made an enormous difference to India's national highway network. Now the concern is on those roads that are more technically difficult to toll manually, in more rural and remote areas.  The estimated cost of construction is US$505,000-US$606,000 per km which are expected to be two lane roads.  The total budget is expected to be US$1.5 billion to spend on such projects which will be built by private contractors. 

What this ultimately will need is for India to consider how it charges use of such roads.  Simple mechanisms like vehicle registration (essential for free flow tolling, but also safety enforcement) and fuel tax will be obvious, but it should provide the basis for India to see how it can evolve tolling towards electronic free flow, and more advanced forms of road pricing in time.

New Brisbane Airport Link toll road may include loyalty programme

I've written about two Brisbane toll roads that have not entirely been successful, from the point of view of their owners.  The Go Between Bridge downtown and the Clem 7 bypass tunnel.  The bankrupt Clem 7 connects with the soon to be completed Airport Link motorway.

Airport Link route connects with Clem 7 at bottom of this map

Airport Link is 6.7km long, connecting downtown Brisbane and the Clem 7 tunnel (which carries traffic from the south bypassing the city) to the East-West Arterial Road which leads to Brisbane International Airport.  It includes a parallel busway and 15km of tunnelling (twin tunnels for the motorway) at a cost of A$4.8 billion (US$5 billion).   That makes it Australia's most expensive road project to date and is touted as Australia's largest infrastructure project.

It is expected to halve travel times on the journeys to the airport by bypassing 18 traffic signal controlled intersections.  It is to be tolled using a DSRC based 5.8 GHz tag and beacon system, with a sophisticated ANPR system as backup, and is due to open in mid 2012.  The concessionaire is called BrisConnections, which has a 45 year concession to finance, build and operate the road.  BrisConnections has had a rocky history as its price collapsed during construction of the road, with institutional investors abandoning the company and retail investors buying stock that is now virtually worthless.  One of the key issues having being conflicting traffic forecasts (an issue for Clem 7).  The Environmental Impact Statement claims the road will attract 95,000 vehicles a day in 2012, the original Product Disclosure Statement, for investors, claimed 193,000.  I suspect both will be too optimistic and the real figure will be closer to 50,000.

The company has barely avoided bankruptcy and is listed on the Australian Stock Exchange.  Tolls for cars are expected to be between A$3.56 and A$4.75 (US$3.70-US$4.94) with higher tolls for trucks and buses.  There may also be higher charges at peak times, indicating a form of congestion pricing.

The Brisbane Courier Mail reports that Brisconnections is considering a loyalty programme to encourage regular use of the road.  Comparisons have been made to the mobile phone market, and so it is being treated as a fully commercial operation.  There isn't concern about congestion, except that the Airport Link will relieve congestion on the free route.   It makes commercial sense to encourage regular users, because they will be contribute a higher proportion of costs of the road, of course the issue will be if Brisbane seeks to introduce congestion charging at a later date as to how that all fits in.

I think it is a good move.  Tolling will be undertaken for a range of purposes, and in this fully commercial context there is no reason why a concessionaire shouldn't take steps to encourage a shift from untolled roads to its road, especially as it still means the infrastructure costs are recovered and helps to offset the distortion that always exists when tolls exist on one road, and not on the parallel route.

Zagreb studying congestion charging

Zagreb's main roads

European Union urban mobility project CIVITAS appears to have funded an investigation into congestion pricing in Croatian capital Zagreb. 

The report from the website says:

The large number of personal cars in the city centre is result of an insufficient road network in the northern part of the city, thus requiring all vehicles to travel across the city centre to go from east to west. There is also an inadequate level of public transport with an insufficient number of vehicles and an ill equipped management system. The study should propose modalities for introducing congestion charging in the city centre, and define the exact target area. It should also familiarise the public with the possible positive results of such a measure, thus ensuring their support for its implementation.

Croatia does need a completed ring road, but I'd argue that it should not just be about considering cordons, but other design options for charging.  Charging certain corridors, or multiple zones is another option.  The key is to design to target congestion, not just what looks technically easy.

According to the Croatian Times, the Zagreb Faculty of Traffic Sciences has proposed a charge of 20 kunas €2.75 or US$3.82 to cross a downtown cordon.

Good on Zagreb for looking at a congestion charge, I hope it can come up with some innovative solutions that will address congestion, but also add to the attractiveness of the city for business, as Croatia is on the cusp of joining the European Union.

Finland: Minister wants national road pricing, Ministry thinks it is too difficult and costly

There have been discussions about congestion charging in Helsinki for some time, but the political climate for introducing road pricing in Finland seems to have changed, quite dramatically.

The six party coalition formed after the June 2011 elections is quite a mixed group. It is comprised of the National Coalition Party (centre-right liberal), Social Democrat Party (centre-left), Left Alliance (far left), Greens (left), Swedish People’s Party (centrist liberal) and Christian Democrats (conservative).

The new transport Minister is Merja Kyllönen from the Left Alliance, and she is keen on road pricing, but not keen on a Helsinki only congestion charge as I reported previously.

State broadcaster YLE reported that she supports a national road pricing scheme, on all roads, for all vehicles. The idea is that it would vary by time and location, so would charge for congestion, but also charge according to the level of public transport availability. The idea being that, say in Helsinki, it would cost much more to drive if the route had a parallel metro line, but not if someone was driving in a remote area.

She didn’t “have a position” on whether such pricing would replace other charges, but appears open to discussion on it. An obvious option is to replace vehicle ownership taxes and reduce fuel taxes as well.

The YLE report indicated that an advantage for Finland developing such a system would be that it could “sell” it to the world, indicating interest in developing the technology and systems locally to the extent possible (and permitted under EU rules).   However, there are quite a few system developers and manufacturers which would be keen to sell technology for implementation in Finland, to avoid a new competitor arising from, say, a rather significant Finnish telecommunications company?

However, the latest report from the Helsinki Times indicates that the Finnish Transport Ministry does not think it is technically feasible. The claim is that “there were fundamental technological hurdles, adding the system would be expensive and easy to cripple with a piece of aluminium foil.”

It would be a shame for that view to prevail, because it is technically possible to do. Systems in Germany, Slovakia and New Zealand all demonstrate that distance based charging, using GPS, can be implemented not only on motorways, but on all roads, and for heavy and light vehicles (see the links on the column to the right under network road pricing). It is likely that France, Belgium and Denmark will follow (and the Netherlands has several times tried to, but only stopped because of politics).

Yes, there is an issue of cost. The initial cost of installing On Board Units to do GPS based tolling is high, and there are always considerable risks with rolling out any system for large scale public use. This initial expense needs to be considered, but the long run economic benefits of better pricing should more than offset this.

Finally, the claim that you can cripple such systems with aluminium foil has been refuted, because protection against this can be built into the system. After all, Germany has been collected distance based charges from trucks over 12 tonnes, from many countries, since 2005. There are multiple ways to make such tampering ineffective, or easily detectable.

The potential benefits to Finland for national road pricing will come from reduced congestion, reduced emissions, greater certainty of revenue collection (as it wont be related to fuel use) and the ability to target pricing of roads related to road usage and vehicle type. A full costs and charges study and national road pricing feasibility study (similar to those carried out in the UK), could consider how efficient road pricing might impact on demand and would generate information on the costs and benefits, and be a worthwhile first step.  It would provide data behind the intellectual ammunition as to how better pricing can benefit the economy, the environment and affect social change.

My view is that it would make sense for Finland to introduce a national system on heavy vehicles first, to reduce the risks involved, prove the system and help develop a strategy to include light commercial vehicles and then private cars. The benefits from heavy vehicle charging are not high, and come from more efficient operations and routing, and maybe addressing pricing disparities between modes.  However, it is a sound platform upon which to roll out a system to cars, and the Netherlands recognised this with its proposed approach.

It’s about time the Finnish Transport Ministry took a good look at the costs of implementing GPS based road pricing, and the technical risks and how they can be addressed. Things have moved on a lot in recent years, the real issue should be about how best to extract the greatest benefits for Finland as a whole, whilst keeping risks and costs at manageable levels.  What the Minister is seeking does have a high upfront cost, but it is technically feasible, and the benefits will be akin to that of Helsinki congestion charging, but on a wider scale.    Indeed, if Finland can embark on a programme of national road pricing for all vehicles, it will certainly be a world leader. 

(PS: My news on Finland is derived from translated Finnish sources and English sources.  Obviously if someone in Finland knows more about the current position, I'd be keen to hear from you).

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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.