PRICING OF ROAD INFRASTRUCTURE IN OIC MEMBER STATES - PRACTICES AND LESSONS LEARNT - comcec
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PRICING OF ROAD INFRASTRUCTURE IN
OIC MEMBER STATES
PRACTICES AND LESSONS LEARNT
FADIAH ACHMADI
JOEL VAN DER BEEK
15th Meeting of COMCEC Transport and Communications Working Group
Ankara, July 7, 2020
THE TEAM
Fadiah Achmadi Joel van der Beek Dr. Douglas Prof. Mark Zuidgeest
Rasbash
Shiva Yeesakonu Emna Ben
Hassine
1 General Road Pricing Practices in OIC countries
a. Policy level factors
b. Institutional and organizational factors
c. Economic and financial factors
d. Technical and technological factors
e. Legislative factors
f. Procedural factors
CONTENT g. Data collection
h. Capacity building
2 Lessons Learnt from Case Studies
Singapore, the UK, South Africa, Indonesia, Tunisia,
and Nigeria
3 Policy Recommendations
Work undertaken
1. Literature review
2. Desk research of road pricing practices
in OIC and non-OIC countries
3. Questionnaire survey
• Response rate: 39%
• 36% Arab, 44% Asia, 35% Africa
4. Study visits to 3 OIC countries
4
1a. Policy Level Factors in OIC Region
• Road pricing mechanisms in OIC countries
In your country, what types of pricing of transport infrastructure are applied (multiple answers are possible):
Open Answer Percent % of answer
Toll road 10%
Toll road + Toll bridges 10%
Toll road + Vehicle taxes 38%
Toll road + Toll bridges + Vehicle taxes 10%
Toll road + Toll bridges + Vehicle taxes+tax on gasoline 5%
Vehicle taxes 19%
Vehicle taxes + truck user charges 5%
Fuel Tax 5%
0% 20% 40% 60% 80% 100%
• OIC countries are neutral or disagree to the idea that the road users
should pay for all the costs
It is correct that the road user should pay for all the costs
Answer Percent % of answer
1 - Strongly disagree 18%
2 18%
5
3 36%
4 23%
5 - Strongly agree 5%
0% 20% 40% 60% 80% 100%
1a. Policy Level Factors in OIC Region
• Road pricing is seen as a way to improve the availability, quality and
safety of transport infrastructure charging for using roads is fair.
The political support during the planning and implementation of the road pricing has been strong
Answer Percent % of answer
1 - Strongly disagree 5%
2 10%
3 33%
4 24%
5 - Strongly agree 29%
0% 20% 40% 60% 80% 100%
It is fair to charge for using roads
Answer Percent % of answer
1 - Strongly disagree 9%
2 9%
3 41%
4 27% 6
5 - Strongly agree 14%
0% 20% 40% 60% 80% 100%
1b. Institutional and Organizational Factors in OIC Region
• No congestion charging applied
• Most OIC countries have a dedicated unit for managing road pricing
Is there a dedicated unit for the management of the road pricing system?
Answer Percent % of answer
Yes 52%
No 48%
0% 20% 40% 60% 80% 100%
• Most OIC agreed that the management unit should be autonomous
If yes, it should be autonomous from Government
Answer Percent % of answer
1 - Strongly disagree 16%
2 5%
3 32%
4 26% 7
5 - Strongly agree 21%
0% 20% 40% 60% 80% 100%
1b. Institutional and Organizational Factors in OIC Region
• Level of autonomy of road administration in OIC countries
varies, but normally the Ministry has oversight and approves
the appointment of the Board of Directors
• E.g, Nigeria and its FERMA (Federal Roads Maintenance
Authority)
• Nigeria also has Road Users Association good example
• Indonesia has a toll regulator to ensure independency to
regulate the interest of toll companies to maximize income
while increasing value to the road user.
8
1c. Legislative Factors in OIC Region
• No difference between OIC and non-OIC countries
• The participation of the private sector in road provision has become a critical
aspect in transport policy
• Legislations should allow toll road operators to collect payments and penalize if
road users avoid payment
• The majority of OIC countries seem not sure whether their legal systems for
road pricing and tolling work well
The legal framework for road pricing and tolling is working well
Answer Percent % of answer
1 - Strongly disagree 15%
2 15%
3 45% 9
4 10%
5 - Strongly agree 15%
0% 20% 40% 60% 80% 100%
1d. Capacity Building in OIC Region
• The skills needed to plan, operate and manage road pricing and congestion charging are
generally absent in OIC developing countries
• Malaysia, Indonesia and the UAE are few countries that are successful in managing toll
roads
• The main challenges in terms of capacity building to provide and manage toll roads and
congestion charging services are political not technical
• The survey accordingly showed that some OIC countries feel they have sufficient
management and technical skills in house, others not. There clearly is a need for capacity
building.
The management and technical skills used in road sub-sector management are sufficient
Answer Percent % of answer
1 - Strongly disagree 14%
2 18%
3 36% 10
4 23%
5 - Strongly agree 9%
0% 20% 40% 60% 80% 100%1e. Economic and Financial Factors in OIC Region
• Road pricing is cost-based (operation and maintenance) determined
How is road pricing estimated?
Open Answer Percent % of answer
a Cost-based 75%
b Willingness to pay 10%
c Others, please specify * 15%
0% 20% 40% 60% 80% 100%
The funding from road users charging is sufficient to pay for maintenance
Answer Percent % of answer
1 - Strongly disagree 43%
2 5%
3 24%
4 5%
5 - Strongly agree 24%
0% 20% 40% 60% 80% 100%111e. Economic and Financial Factors in OIC Region
• Road pricing is mostly not based on external costs
Do the pricing mechanisms take the environmental effects into account?
Answer Percent % of answer
Yes 32%
No 68%
0% 20% 40% 60% 80% 100%
If yes, income from road pricing is able to offsetcosts of accidents congestion and pollution
Answer Percent % of answer
1 - Strongly disagree 27%
2 20%
3 20%
4 20%
5 - Strongly agree 13% 12
0% 20% 40% 60% 80% 100%1e. Economic and Financial Factors in OIC Region
• The highest share of the taxes revenues is channeled to the general
public budget
Based on the taxes on gasoline, transport infrastructure use, and other pricing schemes’where are these revenues allocated to (multiple answers are possible):
Open Answer Percent % of answer
General public budget 29%
General public budget + Public transport improvements 5%
General public budget + Public transport improvements + Transport infrastructure investments 29%
General public budget + Transport infrastructure investments 14%
Public transport improvements + Transport infrastructure investments 10%
Transport infrastructure investments 10%
Road maintenance fund 5%
0% 20% 40% 60% 80% 100%
131f. Technical and Technological Factors in OIC Region
• Electronic toll gate systems utilizing ANPR and/or RFID-technology-based tag are
applied (and mostly compulsory) in many Asian, Middle Eastern and North African
OIC countries
• Benefits of ETC: time efficiency, minimizes moral hazard risks related to cash
payments and promotes a safer work environment for employees
Cashless tolling is much better
Answer Percent % of answer
1 - Strongly disagree 14%
2 10%
3 19%
4 29%
5 - Strongly agree 29%
0% 20% 40% 60% 80% 100% 141f. Technical and Technological Factors in OIC Region
• Satellite-based systems are applied nowhere in the OIC region.
In your country / city, do the road charges vary according to the road traffic condition or time of travel
Answer Percent % of answer
1 - Strongly disagree 38%
2 38%
3 10%
4 0%
5 - Strongly agree 14%
0% 20% 40% 60% 80% 100%
151g. Procedural Factors in OIC Region
• Concession procedures have been applied in many OIC countries, characterized
by open and competitive bid process
• OIC Member States agreed that determining road user charges based on distance
is the fairest method
Road user charging based on distance is the fairest method
Answer Percent % of answer
1 - Strongly disagree 9%
2 5%
3 32%
4 32%
5 - Strongly agree 23%
0% 20% 40% 60% 80% 100%
161g. Procedural Factors in OIC Region
• Majority of OIC countries carry out a feasibility study to compare expected costs and
benefits
Was there a feasibility study comparing expected costs and benefits?
Answer Percent % of answer
Yes 57%
No 43%
0% 20% 40% 60% 80% 100%
• Less than half of surveyed OIC countries comparing different pricing alternatives in the
feasibility studies
Have the different pricing alternatives been compared?
Answer Percent % of answer
Yes 48%
No 52% 17
0% 20% 40% 60% 80% 100%1h. Data Collection Method in OIC Region
• Household Travel Surveys are conducted in many OIC countries, however sharing and
dissemination of data is inadequate due to:
complexity of organizational governmental entities
reliability of the data due to diverse methods of collection
data remains mostly under the ownership of local authorities
access to the raw data are limited for external entities
• Survey on Willingness to pay
Are there any willingness to pay surveys implemented?
Answer Percent % of answer
Yes 52%
No 48%
0% 20% 40% 60% 80% 100% 182. Lessons Learnt from Case Studies
Best Practices
The UK, Singapore, and South Africa
Visited OIC Region
• Asia : Indonesia (Jakarta)
• Africa : Nigeria (Lagos and Abuja)
• Middle East : Tunisia (Tunis)
In each visited country, interviews and meetings were held with:
• Public authority (20-25 people), e.g. Ministry of Transport, Ministry of Economics
and Finance, Tax Authorities, and Ministry of Equipment, Housing and Spatial
Planning.
• Private sector, i.e. Toll road companies
19
• Academia (2-3 people)2a. Singapore
• Rapid rise in vehicle ownership in the early 1970’s
202a. Singapore (Policy Factors)
Two principle measures adopted by the government of
Singapore to control traffic volume and manage traffic
flow:
1. Discourage vehicle ownership
• High vehicle taxes
• Vehicle quota system
Targeted all vehicle owners regardless of the
distance and time they actually spent on the roads
High sunk costs to own a car resulted in high
utilization of the car to reduce operating costs
2. Regulate vehicle usage
• Petrol duty
21
• Congestion pricing2a. Singapore (Lessons Learnt)
• Road pricing in Singapore has been effective in controlling traffic volume,
managing congestion and controlling the vehicle population.
• Success factors:
The availability of viable alternatives for motorists who do not want to pay
congestion charges: alternative travel route/time, good quality public transport
Intense publicity and communications
Testing of the devices and the system reliability, without causing unnecessary
hassle to the motorist
The “pay per use” concept and the rates adjustments of six times a year are
perceived fair by motorists
Regular traffic monitoring and traffic data collection 222b. United Kingdom (UK)
• The UK has long experience in congestion charging in its capital city London, but
failed to introduce it in other cities.
• London Congestion Charge (LCC) was introduced in 2003 to cut traffic levels and
ease severely clogged roads
• In 2019, LCC was rebranded to be Ultra Low Emission Zone (ULEZ)
232b. UK (Policy Level Factors)
• Political force driving LCC: to generate funding for public transport and
to reduce congestion in Central London
£8 a day in 2003, £8 from 2005, £10 from 2011
• The decision to extend the LCC zone faced critics from 70% public and 80%
of businesses LCC time became shorter
• Political boost was received when research suggested the health benefits
from reduction of air pollutant LCC was expanded ULEZ was
established
• Lesson learned: Health is a good political driver to introducing congestion
charging
242b. UK (Legislative Factors)
Highways Act of 1980
Defines a highway as being where there is a public right of passage over land at
all times "without let or hindrance" that follows a particular route
Sets out most of the current legal basis for providing and funding roads
Covers specific matters in legal action against a highway authority for damages
for non-repair of highway
the rights of road users to recover costs incurred due to suboptimal road
attempt to set up transaction between user and supplier of roads
does not directly connect payment with levels of service
Greater London Authority Act 1999
establishes the Greater London Authority (GLA), responsible for transport,
planning and the environment of London
Providing enabling powers, allows to introduce road user charging 252b. UK (Lessons Learned) • There remains political resistance in the UK to road tolling • Having an autonomous roads agency works very well • LCC is benefitting from localizing its implementation, by TfL. Much of the TfL revenue is sourced from the LCC • No hypothecation of government revenues. All income from road users goes into the central treasury • Highways Act sets up the rights of road users regarding compensation due damages from poor roads • Route classification provides the basis for allocation of resources for operations and maintenance of roads. It can be devolved to local government, provided the criteria are clearly set out. • A graduate intake programme to build capacity in key areas and fast tracking for 26 potential senior management to minimise turnover
2c. South Africa (SA)
• The only country in non-OIC African
region with developed toll road system
and sufficient data to report on the
experience
• No congestion charging system anywhere
in Africa, due to
technology and management capacity
lack of political will to impose
additional taxes on poor people
272c. SA (Policy Level Factors)
• In 1982/83 the National Roads Act was amended to allow government to levy
tolls
• The first toll road was opened in 1984
• Pricing is to raise funding for the provision of road space, not planning,
economic or environmental
• Road funding became a policies imperative in the 1996 White Paper
• Congestion charging pricing to reduce demand and traffic congestion in the
Johannesburg Pretoria Area (Gauteng), has yet to fully evolve.
• Policy is unclear as to what the income allocation formula should be.
• Political support is based on:
Revenue of tolling must be spent exclusively on roads
28
Availability of non-tolled route alternatives for road users2c. SA (Lessons Learned)
• Good record in transport policy and planning and made a number of good transport
plans more emphasis is needed on improving accessibility rather than maximizing
mobility need to be reflected in road pricing
• SANRAL is a lean organization with a good structure that provides oversight but not
services (which are mainly outsourced)
• South Africa sees development as a greater priority than maintenance
• eTagging is resisted because of concerns over use of personal data and other reasons
needs to be more acceptable politically by ensuring that personal data is protected
• Legislation is rigid on the application of fuel level and toll income to be spent exclusively
on roads
• Introduction of congestion charging has been problematic owing to concerns mostly
about equity
• Data collection is comprehensive covering road condition travel and expenditure 29
patterns2d. Indonesia
Road Pricing Mechanism
• Tolling of national roads (since 1987)
• Vehicle taxing
• Congestion charging/Electronic Road Pricing (ERP) in the capital Jakarta (to be
implemented)
302d. Indonesia (Policy Level Factors)
• Road Act 38/2004
Allows government to levy tolls
Defines a toll road as a public road, where users are obliged to pay a certain amounts of money,
and as an alternative to existing public roads
Requires tolled roads to have higher design standards than non-tolled
Policy objective is to provide new infrastructure
• Regional Taxes and Retribution Act 28/2009
Vehicle taxes are collected and managed by provincial governments
Ministry of Finance regulates tax rates by determining the range/the maximum of the rates
provincial governments have authorities to determine the tax rates as long as within the ranges set
by the central government, and must be written in the regional regulations
• (Upcoming) Congestion Pricing
Road Traffic and Transport Act 22/2009 Government Regulations and Presidential Regulations
to implement
31
Since then, (at least 6) new legislations have been issued to complement the previous ones with
contradictions among them2d. Indonesia (Institutional and Organizational Factors)
Road Tolling
• In 1978-2004, Jasa Marga (now the state-owned toll road company) was the regulator
and toll road operator
• Starting 2005, these roles were split as mandated by the Road Act
• Indonesian Toll Road Authority (BPJT) is authorized by and responsible to the Ministry
of Public Works and Public Housing to regulate the toll roads operation
• Toll road companies are engaged in the toll roads operation through a concession
agreement with the national government: funding, technical planning, construction,
operation and maintenance
• There are 52 entities operating 73 toll roads in Indonesia.
Congestion Charging
• ERP Management Unit is established
• Tasks: operate, maintain, monitoring, calculate ERP tariff and unit cost, appoint
32
operators, control implementation.2d. Indonesia (Economic and Financial Factors) Road Tolling • Equity principle does not apply • Road Act regulates toll revenue to be used for investment return, maintenance and development of toll roads • Initial toll tariff per km and its adjustments are based on WTP, ATP, vehicle operating cost efficiency, investment feasibility, distance (for closed toll system), and Average Trips Length (for open toll system). Vehicle Taxes • Motor Vehicle Tax, Excise Duties of Vehicle Ownership Rename, Vehicle Fuel Tax • Motor Vehicle Tax has an earmark: ≤ 10% of the revenue must be allocated to (non-tolled) road construction and maintenance, and to public transport. • Vehicle taxes take environmental costs into account by discouraging new vehicle production • In some provinces, vehicle taxes form the largest income of the government. 33
2d. Indonesia (Economic and Financial Factors)
• Congestion Charging
ERP tariffs are calculated based on effectiveness of congestion control
and implementation costs
Progressive tariffs applied based on zone, traffic volumes, ATP and WTP
Revenues to be used to improve road-based PT services and to increase
traffic performance of the ERP roads (after the implementation costs have
been covered)
342d. Indonesia (Technical and Technological Factors)
• Toll Collection
E-tolling (RFID) has been implemented in Indonesia since
2009. Now 100% e-toll.
transaction time 7 4 seconds
reduce moral hazard
New payment systems are considered (QR code, DSRC,
ANPR).
GNSS would be hindered by multilevel intersections
• Congestion Charge Collection
RFID, DSRC, or ANPR under consideration
Criteria: internationally standardized, interoperable, allow
Multi Lane Free Flow and electronic enforcement system
352d. Indonesia (Legislative Factors)
Road Tolling
Aspects Law 13 of 1980 Law 38 of 2004
Determining of a toll road section, President Ministry
types of vehicles, the amount of tolls.
Authority to operate and manage toll State-owned toll road Toll road companies
roads company
Regulating and operating roles State-owned toll road BPJT as the regulator, toll
company road companies as operators
• Giving the exploiting role to toll road companies through a concession
mechanism, aims to accelerate the realization of the expressway network as
part of the national road network
• PPP for the toll roads development is the most successful PPP in Indonesia
besides oil and gas sectors enabling environment gives certainties to the
private sector 362d. Indonesia (Legislative Factors)
Congestion Charging
ERP implementation will mark a full implementation of Electronic Law Enforcement
372d. Indonesia (Procedural Factors)
Toll road concession procedure
382d. Indonesia (Data Collection Method) Road tariffs are determined based on surveys on WTP and ATP, conducted as part of fesibility studies determine the maximum and minimum prices Road Tolling • At the operational phase, surveys on the road condition are done regularly by a toll road company to monitor the roughness of the roads under its concession. • Results are reported to BPJT, who also regularly does on-site checks of the road condition. Congestion Charging • Feasibility study conducted in 2012, incl. WTP and ATP surveys on 25 roads (53 km) that are currently operated under the odd-even traffic rule • Interviews to 930 road users along these roads 39
2d. Indonesia (Capacity Building)
• Transportation Research and Development Agency under the Ministry of Transport
(MoT):
formulate technical research
development policies, plans and programs
research and development in the areas of multimodal transportation
management, land transportation, sea transportation, and air transportation
Involved in studies of electronic toll collection, toll road accidents, and speed
limit on toll roads develop recommendations for the MoT
• ERP implementation
difficult to rely only on government employees
needs a special organizational structure within the ERP Management Unit, that 40
combines government employees and non-government technical staff2d. Indonesia (Lessons Learned)
• Political will in road pricing is very strong, resulted in a strong and successful PPP
mechanism for the highways development
• Contradictions occur between ERP legislations poor relationship management among
the involved government institutions strong leadership is key
• A success factor of PPP in toll roads is the separated role of toll regulator and operator
• The established ERP Management Unit showed a good determination to manage the
upcoming ERP system effectively.
• Involvement of Road Users Associations is missing in the decision making process
• No equity principle in toll revenues should be relaxed
• To ensure successful implementation of electronic law enforcement, population registry,
vehicle registration database by the Police, and vehicle taxes database by Tax and
Retribution Agency, need to be integrated
• User engagement needs to be strengthened and educated on how tariffs are 41
determined2e. Tunisia
Road Pricing Mechanism
• Tunisia started to build and operate the motorway
network in 1981 with the A1 Motorway Tunis-Turki (36
km). Currently there are three highways in Tunisia
• Currently Tunisia maintains about 20,000 km of classified
roads, and 22,000 km of non-classified roads
• Of this, more than 500 km toll roads (A1, A3, A4)
• Ambition of bringing key pieces of infrastructure under
PPPs
422e. Tunisia (Policy Level Factors)
• Development Plan of Tunisia 2016-2020: the upgrade and extension of transport infrastructure
is a key route to reaching the target of reducing regional disparities
• Most infrastructure is freely available
• The charge on the limited stretch of toll roads is very low
Major directions (2016-2020 period):
• Develop transport infrastructure and
encourage public private partnership
• Quality of the services provided
• Restructure public enterprises
• Priority to public transport
• Develop the rail transport sector
• Efficiency of the logistics system 43
• Intelligent sustainable transport2e. Tunisia (Institutional and Organizational Factors)
In Tunisia six departments are involved in the activities of road transportation:
• The Ministry of Transport: provision and management of transport system
• The Ministry of Equipment and Housing: management of road infrastructure
• The Ministry of Development, Investment and International Cooperation: five-year
development plans and investment
• The Ministry of Finance: transport taxation and customs facilitation
• The Ministry of Interior: safety and movement of people and goods
• The Ministry of Environment and Spatial Planning: environmental protection
Tunisia Highways Company (STA) operates and manages the motorway network as a
concessionaire
Tunisia has established a Concessions Unit that aimed to support the implementation of
PPP as an alternative procurement option
442e. Tunisia (Economic and Financial Factors)
• Toll tariff is ±US$ 0.01 (0.027 Dinar) per km and has not
changed since 2010 very low
• The toll price structure distinguishes 3 categories of vehicles:
• Category 1: vehicles with 2 or 3 axles, with a height at the
front axle, of less than 1.3 metres
• Category 2: vehicles with 2 axles, with a height at the front
axle, of more than 1.3 metres
• Category 3: vehicles with 3 axles, with a height at the front
Food and fuel subsidies in four MENA countries (% of GDP)
axle, of more than 1.3 metres 9
8
• The toll revenue is insufficient to cover the cost of
7
6
5
maintenance of the STA road network 4
3
• Tunisia subsidizes fuel consumption. The State contributes 2
1
about 25% of each liter of fuel consumed by road users 0
2011 2012 2013 2014 2015 2016 2017 45
2018
Jordan Morocco Tunisia Egypt2e. Tunisia (Technical and Technological Factors)
Two toll collection systems in Tunisia: cash (majority) and electronic
Electronic Toll Collection (ETC) system (introduced in 2010) utilizes Radio Frequency
Identification (RFID) technology: electronic badge in the vehicle and antenna at the toll gate
Two types of electronic badges: prepaid electronic toll cards and automatic badges.
In 2019, STA has suspended the use of prepaid electronic toll cards.
Currently there are about 75,000 automatic badges in circulation. STA’s ambition is to reach
150,000 badges in the near future.
462e. Tunisia (Legislative Factors)
• Legislative Decree 89-9 (1 February 1989):
Tunisia Highways Company
• Concession Law (Law no. 2008-23 of 1 April
2008): PPP projects
• Concession Procurement Decree (2010-
1753, of 19 July 2010): selection and
awarding
• Legislative Decree No. 2011-111 (24 October
2011): Electronic toll collection
• Law on Public- Private Partnerships (13
November 2015): investment financing
• 2018 Budget Law: reduction in energy 47
subsidies2e. Tunisia (Procedural Factors)
• Regarding project appraisal and project
management, Tunisia follows international
guidelines, with attention for social,
environmental and hygiene aspects
• Tunisia applies the TARTIB method
(multicriteria analysis) for the selection and
prioritizing of public investment projects
• The National committee for the approval of
public projects (CNAPP) plays a key role in this
structure.
• Part of this structure is to establish a database
relating to the projects to be studied using
objective criteria, while considering the
48
economic, social and regional return as well as
the methods of their financing.2e. Tunisia (Data Collection Method)
• The National Institute of Statistics is responsible for collecting, collating and
analyzing a wide range of data. With regard to road transport, the following
databases are maintained:
Registration of vehicles by category
Registration of vehicles by brand
Evolution of the number of accidents per environment
Evolution of the number of injuries by cause
Evolution of the number of accidents, of wounded and killed
• More specific data relating to transport infrastructure investment are
collected on a project basis by consulting companies and research agencies
• It is evident that more transport data would be very helpful to Government to
49
better plan transport infrastructure2e. Tunisia (Capacity Building)
• Capacity to educate technical engineers, financial and logistics experts is sufficient
• For transport economists, Tunisia almost fully relies on services from foreign
countries
• The major training institutes regarding pricing transport infrastructure and related
issues are:
The Faculty of Economic Sciences and Management of the University of Tunis El
Manar, the first faculty (1958) of economics and management in Tunisia
CNAM Transport and Logistics/National Institute of International Transport and
Ports (ITIP)
Higher Institute of Transport and Logistics of Sousse, an institution dependent on
the University of Sousse
502e. Tunisia (Lessons Learned)
• Earmarking in the vehicle taxes, mandated by law, is recommended to be dedicated
to road infrastructure investment and maintenance
• Integrating road infrastructure with public transport would create a synergetic result
• Apply appropriate pricing, i.e. relatively high pricing where demand and congestion
are high, in order to create funding for infrastructure with a high social value
• The choice for electronic toll collection serves the quality of the road experience
• Strengthen the PPP mechanism to expand financial and operational possibilities
• Develop a solid database on transportation and transport infrastructure to undertake
evidence–based policy transport research and create a sustainable policy
framework
• Research on willingness to pay might result in new opportunities
• Developing capacity in the field of transport economics to optimize the allocation of
its transport infrastructure related means 512f. Nigeria
• Africa’s most populated country with 206 million people
• It has a long history of toll roads
• Lagos is the financial center of Africa, and the most
populous city of Sub Saharan Africa
• Nigeria has a national road network of about 200,000 km
• Nigeria’s tolling history goes back to 1970’s (trunk roads)
• In 1999 the tolling was abolished
• Nigeria’s more recent tolling track record consists of two toll
roads and one toll bridge, all situated in Lagos Stat.
• Nigeria Federal Government recently decided to (re-)
introduce a ‘friendly’ tolling system on its trunk roads,
throughout the country
522f. Nigeria (Policy Level Factors)
• Currently tolling is on the table, while PPP mechanism is preferable to attract private
involvement
• Federal government expects to carefully balance toll introduction with quality increase
• There is no robust roadmap. A clear government policy on transportation is on the verge
• Deregulation is now the global practice
• The current reforms of government include privatization and commercialization of major
public transport enterprises, and appropriate road pricing
• There is a call for growth and change
• Willingness to pay for mobility and infrastructure is flawed, because, according to the
users, the price is set too high, which consequently creates negative public opinion
• The Lagos State government: the collection of tolls is not only required to maintain the
bridge but also to generate funds for building other bridges to link parts of Lagos
532f. Nigeria (Institutional and Organizational Factors)
Key organizations in pricing of road infrastructure:
• The Infrastructure Concession Regulatory Commission (ICRC): develop and implement PPP
framework for the provision of infrastructure services, regulate the PPP endeavors
• Lagos State PPP Office: SPV established recently by Lagos State with comparable
objectives as ICRC
• Federal Roads Maintenance Agency (FERMA): statutory organization aimed at managing
and maintaining federal roads
• Bureau for Public Procurement (BPP): determines infrastructure projects
• Lagos Metropolitan Area Transport Authority (LAMATA): develops the Lagos State Strategic
Transportation Plan
• Lagos Bus Services Limited (LBSL): provides a compass and guide to the operation of bus
services in Lagos
And expected soon:
54
• Federal Road Authority (FRA): responsible for planning, designing, constructing, maintaining
and tolling Federal roads2f. Nigeria (Economic and Financial Factors) • Nigeria has a challenge in pricing of its road infrastructure • The public expenses on road transport infrastructure are not covered by anything, but direct and indirect taxation • Two major sources of Government revenues are oil and VAT • Nigeria subsidizes fuel by 25% • Nigeria has very low taxes compared to its peers • The ambition is to start the tolling of the Federal roads as soon as possible, starting when the upgrade of the roads is finished, which is expected in 2021 • The model foreseen to be followed is that only economically viable roads will enter into concession. The non- concessioned roads will remain under FRA/FERMA • The toll revenue will be sufficient to cover for maintenance 55 and to contribute to cover capital expenses
2f. Nigeria (Technical and Technological Factors)
Lagos
• After the inception, both for the Lekki-Epe express way and
the Lekki-Ikoyi Link Bridge, users have the options of using
either the swift pass system (a card that clients swipe
against a sensor ), e-tag system (a sticker is put on the
windshield and the camera reads the sticker) or by cash
• The vehicles do not need to stop at all (except cash)
• Since 1 January 2020, the option of cash payment on the
bridge has stopped
Federal roads
• Toll collection on will be electronic, not cash
562f. Nigeria (Legislative Factors) Federal government • Highways Act 1971: Federal Ministry of Transportation obtained power to apply road tolls • Public Enterprises Act 1999: greater private sector involvement in public infrastructure • FERMA Act No. 7 2002: created the Federal Roads Maintenance Agency (FERMA) • ICRC Act 2005: the federal government established the general PPP framework for Nigeria Lagos State • Lagos State Government was an early promoter of private sector finance in Nigeria • The Lekki-Epe Expressway procurement preceded the establishment of the Office of Public Private Partnerships (2008) and the Lagos State Public Private Partnership Law (2011) • For the Lekki-Epe expressway, an SPV (Lekki Concession Company) was established • The Lekki-Epe system has a 5-year review period • The Lagos State had to buy the concession back in 2014 57
2f. Nigeria (Procedural Factors)
Lekki-Epe expressway concession project won
several international awards:
• Africa Investor 2008 Transport Deal of the year
• Euromoney International 2008 Africa PPP of
The Year
• Reuters 2008 African Infrastructure Deal of
The Year
• IFC/ Infrastructure Journal Top 40 Emerging-
Market Award in 2013
• The user-based payment plus limited cost to shareholders was a novel idea for West Africa
• One of the keys to success was stakeholder engagement
• In order to set prices, a payment study and affordability analysis have been performed
58
• The result was a massive success with no resistance2f. Nigeria (Data Collection Method)
Federal State
• Nigeria has a poor record in data collection, as it lacks historical data
• The country is aware that data is key for good decision making
• The government has conducted traffic counts in two periods (2017 and 2019) in
order to identify changes in traffic volume
• The Federal government is planning to have permanent embedded sensors on
trunk road network for traffic counts
Lagos State
• In 2009, assisted by the World Bank, LAMATA started to set up data sets on
households, origin-destination data, traffic data and simulation models
• On the Lekki Epe toll road the electronic payment systems is integrated with
59
transport data collection system, which makes it possible to develop a smart
database system2f. Nigeria (Capacity Building) Nigeria is sufficiently endowed with technical skills and adequate human resources in road infrastructure policy design and pricing • The School of Transport at the Lagos State University (LASU). It started 30 years ago in response to the need for capacity building in the transport sector • The University of Lagos (UNILAG). Since its establishment in 1962, the institution has been playing a key role in nation building by molding the youth population through its teaching, research and community services • Nigeria Institute of Transport Technology (NITT) Zaria. NITT was established in 1986 to among other things address the problems of the transport sector • Daura University is being developed and will soon be operational: an investment of the China Civil Engineering Construction Company (CCECC) with the support of the federal government with guidelines to ensure domestication that will support 60 local infrastructure
2f. Nigeria (Lessons Learned)
• The policy stance of promoting public transport indicates deep and valuable insight, and requires
political recognition
• Increases in road user charges would gain more political support if they were legally bound to be
allocated to public transport on the basis of promoting equity
• Urgency for the establishment of a Federal Road Authority to promote PPP solutions in Nigeria,
and National Road Fund to develop and maintain dedicated funding for road infrastructure
• Appropriate pricing is essential for the national, regional and urban road infrastructure network
• Stakeholder engagement is key to infrastructure design and pricing. The success of Lekki-Epe
expressway concession was largely due to the stakeholder engagement
• Good communication and allocation of responsibilities both, between State and Federal
government, and between the departments of Transport and of Works
• It would be recommendable that Nigeria improves its data collection system
• Strengthening cooperation with universities is essential, more evidence–based research and 61
empirical studies in policy formulation, design and implementation strategies3. Policy Recommendations for OIC Members
Policy level
• New transport-planning paradigm that puts more emphasis on improving accessibility rather
than maximizing mobility
• Road pricing should aim at reducing demand and decoupling transport resource consumption
from an economic growth point of view
• Transport policies need to provide more guidance on infrastructure pricing that is demand side
orientated and based on the willingness to pay than on cost recovery
• The difference in policy objectives between road pricing and urban congestion charging must
be underlined
Congestion is a serious problem that should be solved by charging
Answer Percent % of answer
1 - Strongly disagree 14%
2 9%
3 23%
4 45% 62
5 - Strongly agree 9%
0% 20% 40% 60% 80% 100%3. Policy Recommendations for OIC Members
Institutional and organizational
• To establish a dedicated unit for the management of road pricing system, to
ensure better coordination among government institutions
• Semi-autonomous road agencies should be set up to develop and maintain the
highway network
• To consider splitting the roles of regulator and operator in toll roads
• Transport planning, including congestion charging, road pricing and related
activities, should be decentralized, devolved from central government to
provincial, district or local government
• Hypothecation policy should be strictly applied by the administrating entity
633. Policy Recommendations for OIC Members
Economic and financial
• Clarity is needed in terms and definitions: Road User Charge vs Road Pricing
• Pricing must ensure that equity is not compromized by any road payments systems
• Earmarking to specific road funds including public transport development, regulated by
laws
• Plans to phase out fuel levies should be made
• In the longer term, countries should aim to apply a universal road pricing based on
willingness to pay, linked to levels of service
Technical and technological
• For many OIC countries that have been utilizing Electronic Toll Collection (ETC), it is
recommended to improve the architecture by integrating payment with data collection
• As no OIC country has congestion pricing yet, now would be the good time to consider
interoperability between ETC and Enterprise Resource Planning (ERP) systems to
increase users’ convenience, acceptance, and to ensure data compatibility.
64
• The chosen charge collection technology should be tested thoroughly prior to
implementation and ensure an effective enforcement mechanism3. Policy Recommendations for OIC Members
Legislative
• In order to promote PPP, create enabling legislation and PPP laws that provide
assurance to the private sector
• Highways legislation should make it clear what the obligations are for both
provider and the user of roads focussing on customers’ needs, rights and
protection
• Legislation that is rigid on the application of fuel levies and toll income to be spent
exclusively on roads, ideally should be relaxed to be spent on all sorts of transport
Procedural
• Stakeholder engagement should be carried out continuously
• Inform the public on the rationale of road pricing mechanisms and to where the
revenues will be channeled
• When it comes to congestion charging, outreach activities should highlight the
65
benefits of the scheme and promote the impact of complimentary measures3. Policy Recommendations for OIC Members Data collection • Develop a robust mechanism of transport data collection, integrated in a smart database system that can be accessed by different institutions to be used for various purposes • Develop various survey instruments that systematically collect data: automatic traffic counting, classification systems • Data collection and performance monitoring should be done by an independent unit Capacity building • Establish transportation research and development agency under Ministry of Transport, or possibly at the level of the OIC, in association with (inter)national universities that have majors in transport and do research in the field • Government’s organizational structures should be flexible to allow for a combination between government employees and non-government technical staff to address the insufficiency of government’s capacity in transportation planning 66
3. Policy Recommendations for OIC Members
Utilizing transport infrastructure pricing to respond to emergency situations such as
Covid-19 and natural hazards
• Covid-19 public health crisis spread through international air travel and long distance (road
and rail) transport, in particular public transport
• Pricing systems may provide points of intervention (natural hazards/spread of diseases):
• to reduce traffic by changing the pricing unit
• to adapt to unexpected situations in terms of opening, closing and (re)routing by
adapting electronic traffic signalling
• Toll road infrastructure could be used:
• to introduce ‘travel bubbles’ and control its use through special permits
• temperature checking of travellers and sanitation at toll gates, thanks to its closed
system characteristic
• Instruments deployed at toll gates would also be very useful in measuring and monitoring 67
traffic and getting network traffic insightsTHANK YOU FOR LISTENING
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