Transcript Document

Senior Road Executives
Programme 2011
Road Financing
Road Asset Management:
Lessons from Seven
Countries
Cesar Queiroz, Roads & Transport
Infrastructure Consultant, World Bank
Presentation Outline
 Introduction
 Institutional
and financing
arrangements
 China, Croatia, Brazil, Slovenia, New
Zealand, Slovakia and UK
 Performance management
 More private participation
 Conclusions, discussions
Introduction




Countries choose approaches to manage their road
networks that are specific to their needs and
circumstances
Under the ministry responsible for transport, most
governments have established a separate agency
or administration to manage roads
A key objective is to improve the efficiency of
management and financing of transport
infrastructure, including roads
A diversity of institutional and financial
arrangements in several dimensions
Differences in Several Dimensions
Decentralization – larger countries tend to be
more decentralized, China being an example with
a very high degree of decentralization (for
example management of the entire tolled
expressway network construction and operation
is delegated under the responsibility of the
provinces), while smaller countries such as
Slovenia and Slovakia, as expected, are very
centralized
 Management structure – executive agency,
public corporations, concessions

Differences in Several Dimensions
Modal responsibility – single mode entities,
multiple mode entities. While China has single
mode entities, in 2001 Brazil established an
agency to manage both highway and railway
concessions, as well as another agency to
manage non-concessioned roads, railways,
ports and waterways
 Sources of financing – public, dedicated funds,
private. Ultimately, taxes or direct payment by
users

Modes of Financing
China
 MOT
is responsible for policy and
regulation of all transport modes,
except railways
 Transport programs implemented by
the 27 Provincial Transport
Departments and Beijing,
Chongqing, Shanghai, and Tianjin
Expressway Development in China

A provincial government first builds a toll expressway
 When traffic has stabilized, it sets up an expressway
corporation as a public limited company
 The company is then listed on the stock exchange and
the government sells shares in the toll expressway
corporation
 The shareholders earn dividends on their shares
 The provincial government invests the money paid by
shareholders into constructing new toll roads
 Private investments have accounted for about 7 percent
of expressway financing. The annual investment on
expressways is about US$17 billion
China: National Trunk Highway System
A
44,000 km network (the backbone)
 Includes 12 major expressway corridors: five
north-south, seven east-west
 Completed in 2005
 Highway construction in 2004: Trunk $21.6 b,
Others $21.1 b, County and townships $15.4
billion
 Development now shifting to poorer western
and central regions
China: Source of funds for roads (2004)
 State
budget
14.3%
 Domestic loans
40.4%
 Foreign investment (mainly IFIs)
1.3%
 Self-financing and others (contribution of
provinces, counties, local townships, villages,
and the private sector, and debt taken on by
the secondary and tertiary levels of
government):
44.0%
China: Current road network
 Total
road network: about 3.73 million km
 Including 60,302 km of expressways and
54,126 km of other high-grade highways
 One of the most extensive transportation
systems in the world developed in the last
15 to 20 years
Brazil
 Transport
system reformed through Law
10.233 of 2001
 National Department for Transport
Infrastructure, under MoT, responsible for
construction, maintenance, and operation of
federal highways, railways, waterways, and
ports
 Brazilian National Agency for Land Transport,
under MoT, responsible for the federal
highway and railway concession programs
Road Financing in Brazil
– mainly earmarked road user taxes
 1980s - tax earmarking was gradually
discontinued
 2001 - earmarked revenues from a fuel tax
(the so-called CIDE), now the main source
of funds
 2004 - public subsidies allowed to help
ensure the viability of concessions (PPP
Law)
 1970s
Brazil
Concessions:
12,360 km
Private
investments:
12% of total
Toll booth,
Rio de
Janeiro to
Juiz de Fora
expressway
Brazil
Slovenia
 Transport
Motorway Company of the
Republic of Slovenia (DARS), a joint-stock
company, is in charge of financing,
engineering, preparing, organizing, and
managing construction and maintenance of
the country’s motorway network
 Sources of funds for DARS include
earmarked fuel tax, vignettes, tolls (for
>3.5-ton vehicles), EU funds, and loans
Vignette in Slovenia
 Introduced
on July 1, 2008 to improve
traffic flow and reduce emissions
 For maximum permissible weight of
3.500 kg, two axles
– Yearly 95 EUR
– Monthly 30 EUR
– Weekly 15 EUR
 For motorcycles: half the price
Source: http://www.dars.si/Dokumenti/Toll/Vignette_308.aspx
Tolls in Slovenia
 Introduced
in the 1970s
 Open toll system: users pay toll as they pass
through a toll station; rates not based on
actually traveled distance (several motorways)
 Closed tolling system: users first enter the
motorway system at a toll station, and then pay
the toll at an exit toll station (A1 & A3
motorways)
 Only vehicles with the maximum permissible
weight over 3.5 tons
Toll payment in Slovenia

Toll rates depend on vehicle category and
emission class, and hour of day
 Tolls can be paid with credit cards, cash, DARS
Card, ABC tag
 Toll amount calculations:
http://www.dars.si/Vsebina/Cestnine.aspx?id_me
nu=206
 Tolls in other European countries:
http://www.dars.si/Dokumenti/Toll/Toll_in_other_
european_countries_335.aspx
Tolls and Vignettes in Slovenia
A toll booth in Slovenia
Toll booth
Kompolje,
A1
Motorway
New Zealand
 For
about a decade, New Zealand had two
separate agencies, one to manage roads
(Transit NZ), and the other to provide the
funds (Land Transport NZ)
 On
August 1, 2008, the Government
merged the two agencies “to provide an
integrated approach to transport planning,
funding and delivery,” thus establishing
the NZ Transport Agency
Croatia

The Ministry of the Sea, Tourism, Transport and
Development (MSTTD) is responsible for transport policy
and the administration of the motorway concession
contracts and

Hrvatske Autoceste, a joint-stock company, 100 percentowned by the state, is responsible for the construction
and management of the public motorway network

Hrvatske Ceste, also a joint-stock company, is
responsible for the construction and management of all
other state roads. County roads are managed by the
County Roads Administration
Sources of road financing in Croatia

Long-term borrowing

Dedicated fuel levy: consolidated in the State
budget in 2006

Tolls on motorways: closed and open (bridges,
tunnels, short motorway sections) toll systems
are used
– The users of electronic toll collection (ETC) use the
dedicated lanes and do not need a toll ticket
Source: http://www.hac.hr/en/toll-rates/toll-payment-conditions/
Slovak Republic

Motorways and expressways are managed by the
National Motorway Company

Class I roads are managed by the Slovak Road
Agency

Class II and III roads are managed by the
country’s eight regions

A current vignette system for charging heavy
goods vehicles is expected to be replaced by an
electronic toll collection (ETC) system
Some commercialized road agencies
a. Croatian Motorways Ltd., established in 2001,
responsible for operation, construction and
maintenance of motorways in Croatia
b. Latvian State Roads, established in 2004 as a State
Joint Stock Company, operates according to an
agreement signed with its main client – the Ministry of
Transport
c. Motorway Company of the Republic of Slovenia
(DARS), established in 1993 as a joint-stock company,
in charge of financing, engineering, preparing,
organizing, and managing construction and
maintenance of the country’s motorway network
Performance Management in Road Agencies
 Some
mature road organizations, such as
the U.K. Highways Agency and the
Swedish Road Administration, use
performance management systems to
demonstrate accountability to elected
officials and to the public
 There
are several reasons to use
performance management
Uses of Performance Management

To establish goals and performance targets to
manage, explain, deliver, and adjust road
budgets and internal activities

To establish effective and achievable
performance levels based on input from the
public, elected officials, and the business
community

To demonstrate good governance and
accountability in meeting or exceeding
performance expectations
UK Highways Agency Performance Measures
a. Road Safety: By 2010 reduce by a third (i.e., to
2,244) the number of people killed or seriously
injured on the core network compared with the
1994-98 average of 3,366
b.Road Maintenance: Maintain the strategic road
network in a safe and reliable condition, with the
following targets: (i) Maintain a road surface
condition index of 100 ±1 within the renewal of
roads budget; and (ii) Maintain benchmark unit
costs for maintenance renewals at a level at or
below inflation
UK Highways Agency Performance Measures
c. Customer Satisfaction: Improve road user
satisfaction by at least 0.25 percentage points
compared with the level achieved in 2008-09
Features of Motorway and Expressway Development
and Operation in Selected Countries
Country
USA
Degree of
Decentralization
High
Source of Finance
Current Management
Structure
Budget, Tolls, Earmarking
Public, Private (PPP)
France
Medium
Budget, Tolls
Public, Private (PPP)
China
High
Budget, Tolls
Public
Brazil
Medium
Budget, Tolls
Public, Private (PPP)
Ukraine
Low
Budget
Public
Slovenia
Low
Budget, Tolls, Vignettes
Public
Slovakia
Low
Budget, Vignettes
Public
Latvia
Low
Budget
Public
Russia
Medium
Budget
Public
New
Zealand
High
Budget, Tolls
Public, Private (PPP)
Finland
High
Budget, Vignettes
Public, Private (PPP)
Western Europe Experience
 The
Netherlands Directorate-General for
Public Works and Water Management –
RWS reviewed road administrations in
the Netherlands, Austria, Denmark,
England, Finland, France and Sweden
 More
information on the study is
available at:
http://www.ecorys.com/rota/rota_12/artikel7_e
n.html
Western Europe Experience
 The
study identified two common areas
that require improvements by the Road
Administrations:
– Coordinating network management
between the national and local levels
– Further developing road user charging
systems to be able to manage road
traffic in the future
Common trends, despite the differences
 Increased
involvement of private parties in
building, maintaining, managing and
operating road infrastructure
 More
emphasis placed on road users with
the development of methods to
communicate with roads users to take into
account their needs and concerns in the
provision of roads
Driving forces as reasons for changes

Change of government and administrative reform

Need for more traffic management powers in one agency

Decentralization

Economic efficiency

Change of management

The state’s finances

Separation of policymaking and implementation

Private sector financing
Private Financing of Roads
 Public-private
partnership (PPP) schemes
have been underutilized in many developing
countries
 Nevertheless,
progress is being made
toward launching a PPP program in roads
and highways in several countries
 Toolkit
for PPP in Roads and Highways
http://go.worldbank.org/P2XMGNYLD0
Toolkit for PPP in Roads and Highways
Link to Toolkit TK
Public Private Partnerships

PPP is a means to elicit the private sector to
contribute to reducing the overall cost of delivering
infrastructure services through increased efficiency
and better management of some risks

In successful PPP projects, the private sector’s
higher cost of financing and the need for a return on
its investments are offset by the benefits provided by
the private participation

Good governance in managing PPP programs is
essential for the public to reap the full benefits of the
private sector’s involvement
Allocation of Risks
High
Traditional Outsourcing
Performance-based Contracts
Availability Payments
RISK
TO
PUBLIC
SECTOR
Low
Shadow Tolls
Toll Road BOT
BOO
Decreasing
Public Risks,
Increasing
Private Risks
RISK TO PRIVATE SECTOR
High
Some references
World Bank Transport Paper No. 32, “A Review of
Institutional Arrangements for Road Asset Management:
Lessons for the Developing World.” Cesar Queiroz and
Henry Kerali, 2010. http://go.worldbank.org/6HDCYBMRT0
 UK Highways Agency Business Plan 2009-10.
http://www.highways.gov.uk/aboutus/documents/Business
_Plan_09-10_Web_Version.pdf
 U.S. Federal Highway Administration. 2010. “Linking
Transportation Performance and Accountability.”
Washington, D.C. USA.
http://www.international.fhwa.dot.gov/pubs/pl10009/pl1000
9.pdf

Senior Road Executives
Programme 2011
Road Financing
Thank you for your
attention
Cesar Queiroz
[email protected]