Transcript Removing the Toll Bar – What about the Banks?

Removing the Toll Bar
– What about the Banks?
Issues to consider in polish reality ?
Based on John Deighton presentation
Rafał Szwedowski
History
The World’s first official toll road or turnpike was
created at Wadesmill in Hertfordshire, United Kingdom
by Act of Parliament in 1663.
The turnpike ran a distance of 17 miles between
Wadesmill and Royston along the line of the Roman
Ermine Street.
Tolls were one halfpenny for a horse and sixpence for a
coach & horses.
There was one frontal toll gate at Wadesmill.
Key feature – Toll gate
The Key feature of all Turnpikes is the Toll Gate
If you do not pay you are not allowed through the gate!
The concept of Gate – Pay – Open Gate remains to this date on
many Turnpikes, although gates now replaced by Toll barriers
By kind permission of www.ideal-homes.org.uk
Toll barrier
Technology advances
Over the past 20 years there have been advances
in the technology of Electronic Tolling Collection
(transponders) and Licence Plate Recognition
(LPR) and the technology is now proven.
So why has it not been adopted on all toll roads?
Advantages
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No queues at Toll gates
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Improved journey times
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Higher traffic volume capacity and consequential revenue
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Tolls do not need to be manned 24/7/365
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Greater user satisfaction
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Lower overall operation cost
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Reduced emissions
Disadvantages
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An “open door” opportunity for Violators
who may consider they can get away
without paying the toll
Loss of business for toll bar manufacturers!
The Banks position – First law
The First Law of Toll Road Revenue
Traffic volume X Toll Rate = Revenue
Second Law
The Second Law of Toll Road Revenue where
the Toll Barrier is removed
Traffic volume X Toll Rate X K = Revenue
Where K = the proportion of users that pay the
Toll (non – violators)
Third law
Third Law of Toll Revenue
The Gate protects the First Law of Toll Revenue
No money – no entry!
K= 1.0
The second law results in revenue uncertainty
The Banks dilemma
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Uncertainty as to the predicted number of potential
Toll Violators leads to Risk Mitigation and the choice
by the Banks of either picking a low K Factor or
insisting the Toll barrier remains
Introducing a low K factor impacts on project
financial viability
Revenue certainty is often considered more
important than all the advantages of removing the
toll gates
The Banks dilemma
The first questions the Banks will ask the
Concessionaire borrower and the Banks’
Technical and Traffic Adviser
What is Factor K?
How certain is your answer?
The answer
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Pick a factor from 0.01 to 0.99
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It depends on public behaviour and attitude
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Your guess is as good as mine
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It depends on the perceived probability of the
violator thinking he can get away with not paying
Depends on legislation for enforcement measures
and penalties for non- payment
The Banks response
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K factor is pushed low
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Assumed revenue reduced
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Project viability put at risk
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If the project involves Operation subsidy the
subsidy will increase
Cost to the State and taxpayer increases
Need for revenue risk mitigation
In these circumstances Project Bankability
becomes an issue and there is a real need for
Violator Revenue Loss Risk Mitigation.
What can be done?
Toll Roads without Toll Barriers
There are examples of a successful toll road
operating without Toll barriers across the
World
Our advisory teams have examined the key
features of these successful projects to
provide recommendations for those projects
contemplating operating without Toll Barriers
Key features
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Robust legislation covering requirement to pay tolls and
enforcement
License plate recognition (LPR)
Transponders for regular users
Ability of non – transponder owners to pay prior to and for a
short time after use of the turnpike
Must have traceability from License plate to vehicle owner
Full access to State Number plate – address database
Responsibility for payment on vehicle owner not the driver
Effective enforcement measures
Violators identified from LPR and sent invoice for toll dues plus
additional penalty for failure to pay
Violator toll payment and penalty enforced by the State either
directly or through Police authority involvement.
Important features
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In terms of the K factor there are two important features
Violator penalties must be set at a level that provides
sufficient funding to cover top-up of the toll revenue back
to K=1.0 plus enforcement/collection costs
State enforcement (with or without Police involvement)
provides a deterrent to potential Violators
Deterrent
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If the Turnpike Agreement only provides the right of the
Concessionaire to pursue Violators for the Toll + Fine
through civil procedures only, Potential Violators will be
aware that the cost of pursuit may outweigh the cost of
recovery and “test” the project.
Result = lower K Factor
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State involvement via legislation with or without Police
involvement is an essential deterrent
Key ingredients
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Sound Appropriate Legislation
Good User awareness of the turnpike through good marketing
and good publicity
Methods of toll payment should be easy to use and userfriendly minimising risk of user “forgetting to pay” or “risking
not paying”
Designated State enforcement authority department needs to
be established
If enforcement is delegated by the State to the Police Authority
it must not only be given the powers through legislation but
should also be both willing, able and suitably manned to carry
it out
State involvement to provide significant deterrent
The overall regime is important
If the legislation and enforcement penalty
strategy is robust, the risk of loss of
revenue can be mitigated to acceptable
levels for the Banks.
Conclusions
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The Toll bar can be removed
There are significant user and environmental benefits from
removal
There are significant economic benefits from removal
Removal will be sanctioned by the Banks as long as there
is appropriate State legislation providing the necessary
and violator toll recovery, penalty and enforcement
strategy
Conclusions
The Banks will not have a problem with Toll Bar removal if the
following are adopted:
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Appropriate State Legislation covering responsibility for toll fee
(vehicle owner), enforcement and access to number plate
database
Violator penalties set at a level that recoveries are at least equal
to lost revenue + cost of collection from Violators
The State is ultimately responsible for collection of tolls from
Violators unwilling to pay, providing security on revenue and
more importantly a deterrent against non - payment
Conclusion
With the right project
legislation this scene will
become a thing of the
past!
Without the right
legislation the scene is
here to stay!
Our experience
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We have served as banks technical advisor on Electronic Tolling and Traffic
Management Systems (ETTM) for Melbourn City Link
We supported Department for Transport’s Road Users Charging team on
investigation of the practical use of PMR, GSM and GPRS for tracking freight
vehicles
For the Santiago South Highway we performed a due dilligance of the toll
collection proposals.
Halcrow lead a study ROCOL (Road Charging Options for London)
We are currently advising Edinburgh City Council on its congestion charging
initiative
And many other
Rafał Szwedowski
email
[email protected]
Halcrow Group Limited Branch Office in Poland
Koszykowa 54 str.
00-675 Warsaw
tel. +48 22 630 83 79
direct +48 22 630 83 81
fax +48 22 625 42 11
halcrow.com