Wednesday, December 11, 2013

A vote for road tolling in Nigeria

On November 6, 2013, the Federal Ministry of Works unveiled a draft Green Paper on federal roads and bridges tolling policy at a consultative forum in Abuja. I have perused the 24-page document and found a lot of interesting and exciting proposals which if carefully, diligently and effectively implemented will go a long way to reverse the road infrastructure deficit in Nigeria. Tolling of roads and bridges is not a new phenomenon in Nigeria, we have treaded that path before between 1980 (or thereabout) and 2004, and it was a sad tale.

The new policy identified three challenges faced under the previous toll collection administration. They are:  Legal disputes, revenue leakages and unmet requirements for maintenance of the tolled roads. I recall that tolls were collected from the many plazas built on major federal highways but the proceeds went largely to private pockets. Allegations were rife that toll managers printed their own tickets and were issuing more of theirs to motorists instead of that of government. It was thus a honey pot for some powerful elements in the Federal Ministry of Works. With the attendant loss of revenue from the toll plazas, coupled with dwindling budgetary allocations, the roads were left to decay as there was little or no funding for road maintenance, rehabilitation or construction.

According to the draft Green Paper, “Nigeria has a total road network of 193,200km of which the Federal Government owns 17 per cent while the states and local government councils own 16 and 68 per cent respectively. Nineteen per cent of the main road areas are paved. As of 2007, only 35 per cent of the Federal roads were rated as being in a good or very good condition. The most recent visual and qualitative condition assessment of federal roads by the Federal Roads Maintenance Agency (March 2011) revealed that only 26.5 per cent of the federal roads are rated as “being in a good condition”.

Yet, “the road sector not only accounts for an overwhelming percentage of passenger and freight movements across the nation, but also for over 95 per cent of non-oil goods conveyed to and fro the Nigerian seaports”. That is straight from the horse’s mouth.  In terms of the number of vehicles plying the road network, the number has risen geometrically from 2,781 in 1937 to 7.6 million in 2007.  The draft tolling policy also rightfully observed that “Nigeria has long suffered from a sub-optimal road network that imposes significant costs in terms of travel time, vehicle wear and tear and high accident rates. Limited access resulting from underdeveloped networks also discourages investment and economic development in many regions of the country”.

The aforesaid makes tolling an appealing and desirable option. As the draft paper affirmed, the benefits are enormous. It observed that, “Provided the programme is well-managed, federal toll roads and bridges can reduce journey times and travel costs and ensure safer travel for road users on the selected roads. It can also encourage more investment and diversification of commercial activity to outlying areas that are currently closed off by poor access. Tolls are also equitable because they are paid by those who use a road or bridge rather than from general taxes, and are reinvested in the road or bridge itself.”

Before someone will develop high blood pressure because of the reintroduction of road and bridge tolling, the proposed policy has made it abundantly clear that not all roads will be tolled. It says: “Not all roads and bridges are viable propositions for tolling. The majority of Nigeria’s roads – especially subsidiary roads and roads with low traffic volumes – will continue to be managed and funded by the Federal Government, as well as state governments and local authorities”.

Three cardinal guides for the proposed tolling are as follows: Toll concessions will only be considered  only where such concessions are financially-viable; permitted only  in respect of roads and bridges where the related investment results in significant improvements to road user so as to promote willingness to pay; lastly,  tolling of roads and bridges formerly financed by public funds will be allowed but the  tolls will be  “ring-fenced and dedicated to defraying the costs of rehabilitation/ upgrading, maintenance and operation of such roads.”

Besides, the new policy seeks the establishment of the Federal Roads Authority which will take on operational responsibilities to champion tolling and contract for road and bridge concessions while the functions of the Federal Roads Maintenance Agency will be taken over by the FRA. The Green Paper also seeks to give policing power to concessionaires to enable them combat toll evasion effectively. It likewise intends to license the concessionaires to erect and operate weighbridge infrastructure (including mobile weighing) at the expense of the concessionaires in order to control heavy axle loads and to provide an enabling framework for such arrangements in the Federal Roads Authority Bill. Indeed, I am excited by this provision. Since 2004 when ex-President Olusegun Obasanjo ordered the demolition of the toll-gates across the country, the weighbridges went with the demolished plazas. Ever since, many articulated vehicles breach the load limit for their vehicles with impunity. What that does is systematic destruction of our roads as many of these trailers doing haulage businesses carry far more than the capacity of luggage meant for their vehicles thereby putting undue pressure on the road.

On the whole, the policy on tolling of roads and bridges is a welcome development. It is good that the Federal Ministry of Works has come up with this new idea of public private partnership financing of road infrastructure and has deemed it fit to consult widely before the re-introduction of tolls. There is no gainsaying that lessons from the past failed attempt have been factored into the new policy. I will however, in addition, state as follows: The ministry must robustly engage the National Assembly for the quick passage of the proposed Federal Roads Authority bill before it. This bill, as I understand, will give legal backing to the new policy and straighten the grey areas between the powers given by the Federal Highway Act and FERMA Act on who has the authority to introduce tolls on our roads.

Second, there is the need for synergy among the three levels of government on this issue. This is because they control different trunks. While the Federal Government controls Trunk A roads, the states and local governments control Trunk B and C respectively. It therefore makes economic and political sense for them to have an integrated policy on road and bridge tolling. Additionally, no road should be tolled unless and until they have been maintained, rehabilitated or upgraded as the case may be. I do not want the current logic being applied in the area of electricity to be used in the road sector. Right now, Nigerians are paying more for electricity they are not enjoying. Only motorable roads should therefore be tolled. Also, in order to encourage motorists to pay, the toll should be pocket friendly while the toll plaza should be big enough and fully automated to allow for smooth flow of traffic.

There should be proper disclosures on the terms and conditions of the contracts to be signed with the concessionaires as well as full accountability on the invested sum, revenue generated, operational cost, and what percentage of  the income is being ploughed back to maintain and upgrade the tolled roads and bridges.