Choices: Toll or troll?

June 21, 2006 (LBO) - Recently there was a news report on innovative policing on the Colombo-Kandy road. On two days of the week, the traffic police would follow errant drivers and videotaping violations of various traffic rules, such as crossing the single or double lines.  Then they would ticket the drivers while making them watch the video of their transgressions. In light of "epidemic" of traffic related injuries described by two Sri Lankan scientists below, one would expect universally acclaim for these police actions. "Road traffic injuries and associated deaths have reached epidemic proportions in Sri Lanka, resulting in 2,000 deaths and 14,000 injuries each year. However, the majority of the statistical reports or studies reviewing this important public health problem are based on police and/or hospital records. While these are valuable sources of information, there has been little effort to investigate the completeness and quality of this data. Underreporting of even the most severe crash-related outcomes, i.e., fatalities, is estimated to be about 25% in Sri Lanka."-Dharmaratne, S.D. and Ameratunga, S.N., "Road traffic injuries in Sri Lanka: a call to action." J Coll Physicians Surg Pak. 2004 Dec; 14(12): 729-30. Recent comparative data are not available, but 1995-96 data shows that a Sri Lankan runs a higher risk of being killed on the road (10.5) than a Bangladeshi (1.7), a Bhutanese (0.8), an Indian (6.3), a Nepali (3.7) or a Pakistani (3.2). Even if we estimate the number of fatalities in 2006 to be 2,500 (1.25 times the number given the Dharmaratne and Ameratunge in 2004 to allow for underreporting and/or growth), the 2006 fatality risk would be 12.5. Yet, I say that no amount of innovative policing can stop the carnage on the roads.Even if we estimate the number of fatalities in 2006 to be 2,500 (1.25 times the number given the Dharmaratne and Ameratunge in 2004 to allow for underreporting and/or growth), the 2006 fatality risk would be 12.5. The problem is simply that there are more vehicles than road. Slow moving hand-tractor pulled trailers going half a kilometer within a village and cars going from Colombo to Kandy are sharing the same lanes. One cannot drive without overtaking; one cannot overtake on a densely trafficked road obeying road rules to the letter. Overtaking against incoming traffic is the single most important cause of fatalities. Unless these fundamental problems are addressed, all the policing in the world won’t make a difference, other than increasing the quantum of bribes and fines collected. Enforcement of traffic rules cannot substitute for building roads adequate for traffic volumes. Adequate road is the necessary condition for safety; effective enforcement of sensible traffic rules is the sufficient condition. Enforcement absent the necessary condition is futile. There is consensus that Sri Lanka needs more roads, especially controlled-access highways. Planning for Sri Lanka’s first controlled-access highway, the Southern Expressway, started in 1988. Work was commenced by the Kumaratunge administration, was accelerated under Ranil Wickremesinghe, continued under Mahinda Rajapaksa as Highways Minister and is scheduled to be completed in around 2010, behind schedule and over budget. The 130.9 km highway is expected to cost LKR 33 billion, revised upward from the original estimate of LKR 29 billion. Highways cost enormous amounts of money. The budget for the Southern Highway alone exceeded the total budget allocated by Treasury to the Ministry of Highways in 2005. Money from the toll? The Government of Sri Lanka has difficulty funding major highways, let alone finding the resources to maintain the existing roads. The websites of the Ministry of Highways (http://www.mohsl.gov.lk/) and the Road Development Authority (http://www.rda.gov.lk/) show that most road construction and maintenance activities are currently funded by development banks and foreign countries. But, this is obviously not enough as anyone who has taken a road out of Colombo, Kandy or any major town can testify. The newest answer is toll roads. This year, the Cabinet approved a proposal to award the contract to build the highway connecting the international airport to Colombo to China Metallurgical Construction Group (http://www.lankabusinessonline.com/sri-lanka-to-begin-work-on-colombo-katunayake-highway-in-may/). It is to be operated as a toll road, the first in Sri Lanka. The 25.2 kilometer highway will cost USD 292.4 million dollars (approximately LKR 29.2 billion; about the same as the original estimate for the Southern Highway). It is financed by a loan from a Chinese Bank, which will be repaid at least partially by toll revenues. Praise for the toll? A toll road is theoretically an excellent solution to the traffic problem. It mobilizes private capital to build the needed roads and yields a continuing revenue stream that can be used to pay down the investment and ensure adequate maintenance and upgrades. The alignment of incentives is likely to yield performance that is superior to what Sri Lanka has experienced under a series of government owned road authorities. Those who use the toll road will gain benefits such as time savings, lower fuel and vehicle maintenance costs, reduced stress, and increased safety. For this, it is reasonable to expect them to make a payment. New "smart" payment mechanisms have reduced the transaction costs associated with toll payments. Those who do wish to pay can still use the old "free" road. Using a toll road, especially in a country with a road density as high as Sri Lanka's, will always be a matter of choice, not compulsion. A toll road will also differentiate traffic. Those who wish to travel longer distances at higher speeds will take the toll road while slow moving vehicles and local traffic are likely to stay on the free road. This will remove one of the main causes of accidents, increasing safety not only for the different kinds of traffic but also for the endangered pedestrians. It appears we should be overjoyed that the current government has had the courage and foresight to introduce this innovate mechanism to address Sri Lanka's chronic transportation problems. But should our joy be tempered? Is there tragedy in the wings? Money for the troll Setting the price for toll roads and bridges, especially when they compete with free roads and ferries, is enormously difficult. If the operator sets the toll too high, not enough traffic will migrate from the old congested "free" road/ferry and the generated revenues will be inadequate to pay back the capital. If the toll is set too low, traffic volumes may be generated, but not enough revenues will. It is absolutely important that first toll road be done right. If the tolls are unaffordable, people will see it as another symbol of government wastefulness, a concrete white elephant. If the first investor goes bust, either because of too-high or too-low tolls, that will spoil the chances for additional investments. The Colombo-Katunayake toll road already shows signs of white elephanthood. No one knows how much will be charged as the toll and what proportion of the total costs will be borne by the Treasury and what will be recovered from the toll. But the signs are not good. The Ministry of Highways website states that the entire highway is expected to cost LKR 11 billion. The reserve price calculated in the course of designing the competitive process to select a contractor was approximately LKR 15 billion (USD 150 million). But the contract amount announced by the Minister of Highways, Jeyraj Fernandopulle, after the Cabinet accepted the terms negotiated during and since the former President Kumaratunga's visit to China at the tail end of her term (http://english.people.com.cn/200509/03/eng20050903_206166.html) was LKR 29 billion (USD 292.4 million). The Cabinet approved contract is almost double the recently calculated reserve price; it is almost triple the cost estimate stated in the website of the Highways Ministry. A contract price resulting from a transparent, competitive bidding process would have been unassailable; but the competitive process was aborted at an advanced stage. There is no way to refute claims of overpricing. If the price is too high and loan has to be repaid, someone has to pay the extra amount. In arms deals, the Treasury (the taxpayers of the country) pays. In the case of a toll road, the toll payers are likely to be called upon to pay. Therefore, it is likely that the toll for the Colombo-Katunayake highway will be set too high. Therefore, it is likely that most of the traffic will not migrate to the toll road and that the congestion on the old road is likely to remain, if not increase. The likely outcome looks to be the continuation of the present congested, under-maintained "free" road to the airport, flanked on one side by empty expressway that harried motorists cannot use because of high tolls and on the other side by the concrete pillars built in the 1960s on the old trace ending at the New Kelani Bridge: the worst possible advertisement for toll roads. What is the wish of an eternal optimist? WISH A: Decisions get revisited in Sri Lanka. One hopes that the LKR 29 billion price will be revisited (or that Minister Fernandopulle will explain how 11 billion became 29 billion). Whatever is done is done quickly and construction starts. WISH B (surely, this is not a case for PLAN B!): Even if not, one hopes that the toll will be set at a reasonable level and that the losses will be absorbed by the taxpayers. This is a bad deal, but at least it will minimize the damage to the one of the key solutions we have for this country's transportation problems.