MOTORWAY TOLL EXPERIENCE IN HUNGARY

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1 MOTORWAY TOLL EXPERIENCE IN HUNGARY Professor András TIMÁR PhD. DSc. Szabolcs NYIRI PhD. Student Budapest University of Technology and Economics ECMT Conference on Road User Charges London, 23 January Timár & Nyiri /17

2 GLORIOUS PAST First experience gained with mandatory tolls on Széchenyi Chain Bridge (1849), Connecting cities of Pest and Buda, breaking the aristocracy s privileges Municipalities right to levy road tolls within their jurisdiction abolished in 1918 First motorway toll introduced in January 1996, when 43 km of M1 ( missing link on Vienna-Budapest motorway) opened Timár & Nyiri /17

3 TOLLING MOTORWAYS Government opted for PPPs to attract private sector s skill & capital to accelerate motorway construction in the early nineties Splitting user charges between fuel consumers (taxpayers) & motorway users (tollpayers) acknowledged & encouraged Constrained budget severely limited public contribution needed to make projects viable 4 medium size motorway projects (M1, M3, M5 & M7) tendered for concessions Timár & Nyiri /17

4 Motorways & expressways Hungary 2002 Tornyosnémeti UA A BÉCS felé POZSONY, PRÁGA felé IV. M15 Győr SK Duna M1 Tatabánya M0 M2 BUDAPEST Vác M3 Miskolc Eger Füzesabony Emőd M30 Polgár V Debrecen Tisza Nyíregyháza Veszprém Székesfehérvár Dunaújváros M5 Szolnok RO M7 Kecskemét SLO Kaposvár V M9 Szekszárd M9 IV Szeged Békéscsaba HR Pécs Timár & Nyiri /17 YU V Helsinki Corridors State managed mway mway in concession expressway mway under construction expressway under construction concession rights granted

5 M1 TOLL EXPERIENCE 1 Revenue maximising toll rates were calculated on the base of forecast traffic & expenses: O & M, tax, debt service (DCR 1,5) Low public contribution (only 5% of BOT project cost), costs of private borrowing (high risk) implied extremely high toll rates to make the project work To reduce exchange risk, toll adjustment formulae in CC allowed increase in line with inflation & local currency depreciation Timár & Nyiri /17

6 M1 TOLL EXPERIENCE 2 Base rate (0,15 EUR/carkm, multiplier for HGV 3.5) agreed in real value, increased from HUF 350 to 900 by Austerity measures lead to 9% devaluation of HUF & 15% drop in real value of personal income in Hungary in 1995 HA Club locked a lawsuit against ConCo, claiming it abuses its monopoly position Trucks used parallel road (due to 6-10 hours waiting times at A border crossing) Timár & Nyiri /17

7 Toll, Útdíj, HUF/km Ft/km 22, % Revenue Elérhető generated bevétel (%) (%) , % Rate of expected corridor traffic on tolled road (%) A várható forgalomnak a díjas utat igénybevevő hányada (%) Megjegyzés: Note: reduction a bevétel-maximáló of revenue maximizing útdíjnak az optimális toll rate szintre down való to (38%-os) optimal csökkentése one csak (-38%) mintegy reduces 5%-os revenues bevételcsökkenést by only okoz -5% Figure 1. Traffic volume and expected revenue on a toll road A díjas in function út forgalmának of specific és a várható toll rate, bevételek related nagyságának to a given alakulása vehicle a category fajlagos útdíj (e. g. függvényében domestic car) egy adott járműkategória, (pl. belföldi személygépkocsi) esetén Timár & Nyiri /17

8 M1 TOLL EXPERIENCE 3 Due to traffic and revenue shortfall (- 45% against plan) ConCo. went bankrupt 1999 New State owned SPC replaced ConCo, halved tolls in (HUF 1300 to 700) Investors lost equity, outstanding loans rescheduled under sovereign guarantee Vignette type toll introduced in for all State managed motorways including entire M1 motorway (170km) Timár & Nyiri /17

9 M5 TOLL EXPERIENCE Substantial public contribution (in kind & operation subsidy for 6,5 years) allowed lower tolls (0,12 EUR/carkm) than on M1 Tolling of existing road (52km), deviation of HGVs back to parallel road implied public upheaval, later claim for vignettes M5 concession (97 km) is working (AADT: 9000 veh/day, capturing 55% of cars, but only 20% of HGVs in corridor) Government considering expensive buy-out Timár & Nyiri /17

10 M3 TOLL EXPERIENCE Feeling resentment, concession tender for M3 (103km) and for M7 (140km) cancelled in 1995 and in 1997, respectively M3 implemented by State owned SPC, financed up to 50% by sovereign loans (EIB and KfW), opened in 1998 As consequence of good loan conditions and non-reimbursable public equity, tolls collected in a closed system (EUR 0,07/carkm) were lower than on M5 or M1 Timár & Nyiri /17

11 TABLE 1. TOLL ROADS IN HUNGARY AND NEIGHBORING COUNTRIES Country Toll motorway or PPP Pan-European Car toll semi-motorway Corridor EUR/km Croatia Zagreb-Zupanja No X 0.05 Zagreb-Bregana No X 0.05 Zagreb-Krapina No Xa 0.03 ARZ, Rijeka-Zagreb Yes Vb 0.05 Zagreb-Breznicki No Vb 0.04 Hum Varazdin-Gorican No Vb 0.04 Istrian Ypsilon Yes No Shadow toll Macedonia Kumanovo-Gradsko No X 0.03 Tetovo-Gostivar No VIII 0.02 Serbia Belgrade-Sid No X Foreign Domestic 0.02 Belgrade-Nis No X Foreign 0.06 Domestic Nis-Doljevac No X Foreign 0.06 Domestic Belgrade-Stara No Xb Foreign 0.07 Pazova-Sirig Domestic 0.02 Hungary Budapest- No IV Vignette, 0.06 Hegyeshalom M1 Budapest-Polgár M3 No V Vignette, 0.06 Budapest-Zamárdi M7 No V Vignette, 0.06 Timár & Nyiri 2004 AKA, Budapest- Yes IV 0.12 Kiskunfélegyháza M5 11/17

12 VIGNETTE SYSTEM 1 Without calculation of vehicles cost responsibilities, flat rate vignette system replaced direct motorway tolls in January 2000 M1 & M3 toll facilities demolished in 2001 Vignette system extended to rehabilitated M7 motorway (110 km) in January 2003 Prices are high but the system is inefficient, control weak, 20-25% potential income lost Expected revenues (HUF million) cover only 75% of O&M expenses in 2003 Timár & Nyiri /17

13 Timár & Nyiri /17

14 Country Austria Czech Republic Slovakia Hungary Validity 10 days 1 month 1 year 10 days 1 month 1 year 15 days 1 year 9 days 1 month 1 year Year 2002 car < 3,5t truck 3, ,5t truck 7, t HGV > 12t Year 2003 car < 3,5t * truck 3, ,5t truck7,5-12t HGV > 12t *In the Summer season a HUF 1000 car vignette, valid for 4 days has been introduced Table 2. Vignette prices in selected countries in (HUF) (Source: Hungarian Automobile Club) Length of motorway/expressway network covered by the vignette system is 2000 km in Austria, 540 km in Czech Republic, 300 km in Slovakia, 270 km and 440 km in Hungary in 2002 and 2003 respectively. Timár & Nyiri /17

15 VIGNETTE SYSTEM 2 In line with coming EU accession, options are studied to transform the vignette system into a more efficient, electronic one, with tolls levied in function of distance travelled, pollution and time Experience with GPS based (Germany) & GSM/GPRS type (Austria) electronic toll collection systems are to be carefully assessed before final decision is taken (probably not before 2005) Timár & Nyiri /17

16 LESSONS TO BE LEARNED Levying motorway tolls is an extremely sensitive political and social issue, needs careful planning & sustainable, strong political will to implement and protect Voluntary intervention although popular, may cause uncertainty, raises doubt about economic justification of infrastructure pricing, fairness of user charges (tolls to be paid for better than average quality services and/or for managing demand aiming to increase efficiency of transport system) Timár & Nyiri /17