A Review of Highway Agencies in the South Asia Region

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A Review of Highway Agencies in the South Asia Region research projects, including: Accelerated pavement testing (rigid and flexible pavements); Updation and revision of technical methods for highways and technical recommendations for highway documentation; Cost-effective ways to upgrade gravel roads; Large tri-axle testing; and Pedestrian safety management. C1.5 Financing Road Infrastructure C1.6 Performance Indicators SANRAL uses two mechanisms for financing its assets. The SANRAL Act (1998) stipulates a distinct separation in the funding of its operations: Non-toll roads are funded by government allocations, and are not allowed to borrow or be cross-subsidized from toll road income, and vice versa; and Toll operations can be divided into two types – those funded by SANRAL itself and operated on its behalf, and roads concessioned to private parties under PPPs. Toll Operations Financing Revenues from toll and funds raised on the capital market are used to finance toll roads. SANRAL is backed by a government guarantee of US$820 million. All borrowings are repaid by the toll fees collected from users in accordance with the “user pays” principle that SANRAL has employed since 1998. Consequently, the cost of borrowing has an impact on road-user costs. The initial toll tariff is generally determined in the range of 80 percent of the user benefit provided by the toll route. These tariffs are adjusted annually for the consumer price index, approved by the Minister of Transport and gazetted. The volatility of construction, maintenance and operations costs has led SANRAL to examine other toll-tariff structures. SANRAL is considering shifting from a user-benefit model to a cost-plus model. The user-benefit model is based on savings in distance, vehicle operating costs and time, for which a percentage in the range of 80 percent is used to determine tariffs with the result that benefits to the road user exceeds the value of the tariff. The cost-plus model is based on the actual cost of providing the toll road, a margin of which is used to determine the tariff. Two principles have been introduced by SANRAL into its toll road business portfolio: Comprehensive Toll Road Operations and Maintenance (CTROM) contracts and the Concessioning of Toll Roads. Roads under CTROM contracts are operated and maintained by the private sector in accordance with set performance criteria. The latter broadly provide that the operators take responsibility for the complete range of operations and maintenance of the toll route in return for a publicly tendered fee. CTROM contracts are now firmly established, and plaza and routine road maintenance operations are running well on the toll road network. Also PPPs have been introduced where the road is concessioned for a period of time (30 years) to a concessionaire that is responsible for the funding, maintenance and operation, including future upgrades of the road. Each road is a self-contained financial entity, run in terms of conventional company law (including paying tax as any company). An overall concession price is negotiated that could include some form of shadow tolling agreement. SANRAL monitors its activities and performance through a set of performance indicators. 122
A Review of Highway Agencies in the South Asia Region C2 New Zealand C.2.1 Introduction to Roads in New Zealand Classification and Management of Roads New Zealand has a widespread road infrastructure, consisting of state highways and local rural and urban roads. State highways are administered by NZTA. The state highway network provides a strategic road link between districts and regions. A state highway is a road that is declared to be a state highway under section 11 of the National Roads Act 1953 (section 60 of the Government Roading Powers Act 1989) or section 103 of the Land Transport Management Act 2003. Currently, their length is around 11,000 km. Local roads are those which are primarily administered by ‘territorial authorities’ (city and district councils) and make up about 80,000 km (88 percent) of all New Zealand’s roads. Territorial authorities, along with regional councils and unitary authorities – collectively known as ‘local government’ – play a key role in the planning and funding system. Local government is responsible for developing, maintaining and operating the large network of local roads and for delivering public transport infrastructure and services. Regional transport committees are appointed by the regional councils and unitary authorities. They consist of members of various government and public interest representatives. Regional transport committees prepare regional land transport strategies and regional land transport programs and provide advice as requested by the regional council. These programs are prepared every three years to set out a region’s land transport activities. Length and Utilization of Road Network The road network is central to New Zealand’s transport system, and carries, on average, 70 percent of New Zealand’s freight movement and 84 percent of commuting trips. Car ownership in New Zealand is one of the highest in the world. Vehicle ownership exceeds 700 vehicles per 1,000 people and is rising. According to a 2006 survey, approximately 82 percent of the people in New Zealand owns a car 33 . Government Policy for the Road Sector New Zealand has adopted an integrated planning strategy. Land Transport Management Act 2003 The Land Transport Management Act (LTMA) 2003 is the main statute for New Zealand’s land transport planning and funding system. It requires government (transport) policies to contribute to the aim of achieving an affordable, integrated, safe, responsive and sustainable land transport system, and provides the five transport objectives (see New Zealand Transport Strategy overleaf) guiding the New Zealand Transport Strategy and the Government Policy Statement on Land Transport Funding. Regional councils, city/district councils, NZTA, and other approved organizations under the Act can receive funds from the National Land Transport Fund for land transport activities they deliver, such as the construction and maintenance of state highways, local roads and public transport services. 33 TVNZ (2010). NZ third in World car ownership. http://tvnz.co.nz/content/1107190/425823.html. 123
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A Review of Highway Agencies in the South Asia Region

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