1. Based on John Deighton presentation Rafał Szwedowski
Removing the Toll Bar – What about the Banks? Issues to consider in polish reality ?
Based on John Deighton presentation
Rafał Szwedowski

2. 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.

3. 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

4. Toll barrier

5. 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?

6. Advantages No queues at Toll gates Improved journey times
Higher traffic volume capacity and consequential revenue
Tolls do not need to be manned 24/7/365
Greater user satisfaction
Lower overall operation cost
Reduced emissions

7. Disadvantages
An “open door” opportunity for Violators who may consider they can get away without paying the toll
Loss of business for toll bar manufacturers!
Another disadvantage is the reluctance/forgetfulness of users to pay independently of passage – also lack of trust in banks and other instiitutions in some countries and preference for anonymous cash transactions

8. The Banks position – First law
The First Law of Toll Road Revenue
Traffic volume X Toll Rate = Revenue

9. 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)

10. 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

11. The Banks dilemma
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

12. 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?

13. The answer Pick a factor from 0.01 to 0.99
It depends on public behaviour and attitude
Your guess is as good as mine
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
Lessons from Congestion Charging and TGB are that:
Keeper must be liable not driver
Must have traceability from Licence Plate
Must have effective enforcement – can be expensive but covered by penalty charges paid – who pays for enforcement? Who keeps the money from penalties paid?

14. The Banks response K factor is pushed low Assumed revenue reduced
Project viability put at risk
If the project involves Operation subsidy the subsidy will increase
Cost to the State and taxpayer increases

15. 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?

16. 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

17. Key features
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.

18. Important features
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

19. Deterrent
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
State involvement via legislation with or without Police involvement is an essential deterrent
Don’t necessarily need police – if you have a law enabling an effective fixed penalty notice regime like London Congestion Charging. Most important is to get the legal framework right

20. Key ingredients 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 user- friendly 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
Other key ingredients are user awareness and ease of payment – good publicity and simple ways to pay essential – overcomes ‘forgetting’ and ‘risking it’
State Police must not just have powers but be willing and able

21. 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.

22. Conclusions 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

23. Conclusions
The Banks will not have a problem with Toll Bar removal if the
following are adopted:
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
Bullet 2 – add ‘at least’

24. 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!

25. Our experience
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
Halcrow Group Limited Branch Office in Poland
Koszykowa 54 str.
Warsaw
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halcrow.com