Fashola: Tolling old roads is wrong
THE Federal Government’s decision to reintroduce tolls on federal highways to raise funds for road maintenance is a wrong approach to solving a multifaceted problem. Restoring toll plazas to 38 points across the country as enunciated by the Minister of Power, Works and Housing, Babatunde Fashola, may sound alluring, but only confirms the Nigerian government’s penchant for policy flip-flops, refusal to adopt people-friendly solutions and lack of empathy with the citizenry.
Let us be clear: we do not reject tolling roads in its entirety, a practice adopted worldwide by the best performing economies. Our position remains, however, that in line with global best practices, tolls should be imposed only on new roads; never on existing roads and only where there are viable, all-year-round motorable alternative roads. Moreover, a more effective and tested way to fund highway maintenance is available via a tax on refined petroleum products, levies on inter-state, heavy duty and international transit vehicles, using a legally dedicated fund. Tolls on new roads by direct public funding and Public-Private Partnership will then provide additional funding.
Our highways are in a bad shape; of the 34,123 kilometres of road belonging to the Federal Government, 60 per cent are in a deplorable condition, according to the National Association of Road Transport Owners. Highways connecting the industrial and financial arteries like Lagos-Ibadan, Lagos-Benin, Lagos-Sango-Abeokuta, Port Harcourt-Aba-Enugu, Abuja-Kaduna-Kano, East-West and the Niger Bridge are often nightmares, despite their economic importance. The roads leading to and out of the Apapa Ports that account for over 60 per cent of the country’s maritime trade and brings over N1.7 trillion in revenues to the government, are a national disgrace. Irresponsibly, the National Assembly slashed the paltry N31 billion earmarked for the Lagos-Ibadan Expressway in 2017 by N21 billion, the N15 billion for the Second Niger Bridge by N5 billion and the Okene-Lokoja-Abuja highway vote by N3 billion. Apapa did not even merit their attention, while they voted over N100 billion for their annual fraud jamboree labelled “constituency projects.” Only N800 million had been released to the Federal Roads Maintenance Agency by November end out of its N25 billion budget for 2017, just as the N100 billion raised through the Sukuk (Islamic Bond) ostensibly for road infrastructure had not been released to the ministry. Incidentally, the Senate is backing the return of highway tolls.
With no funds to maintain the roads, returning tolls may appear to be the solution. After the government removed toll gates in 2003, businesses, social groups and individuals have since invested on all sides of the roads: restoring tolling will, therefore, impose unforeseen and unplanned expenses on all, fuel inflation and possibly more job losses. Fashola said the tolls would be imposed only after repairs of major highways had been completed; that toll gates would be managed by the private sector and that the funds would be used to maintain highways.
The government should re-introduce a special tax on petrol while reducing the sums for bridging, lightening and other spurious items on the petroleum products pricing template. Tolling of roads is widespread in the United Kingdom, Europe, United States, and Canada, among others. But there are always toll-free alternatives and PPP comes heavily into play. By law, federal interstate highways in the US are toll-free; some super expressways feature both toll-free and tolled lanes; some such as the Connecticut and the Richmond-Petersburg highways built with bonds and tolled become toll-free when the bonds are paid off and many others are privately financed and run.
We should similarly encourage private investment on Build Operate Transfer basis, but strictly for Greenfield roads, either publicly funded, private or PPP; not existing ones. In China, tolling is highly developed, involving state and regional governments, as well as special purpose companies managing highways or sections and tolls are used to recover costs of building and for maintenance. In the UK, the central government manages the Strategic Road Network through the Highway Agency created in 1994 and local authorities manage the local roads. Funding is raised through a fuel duty tax on each litre of petrol, Vehicle Excise Duty charged on all cars used in the country and a levy on heavy duty trucks. One-third of HA’s $2.7 billion budget was reserved for maintenance in 2012/13 fiscal year. A report by CBN’s research department found that Ghana, Guatemala and Tanzania also levy a tax on petrol to fund highway maintenance.
This is the way to go; FERMA should be well funded and given the autonomy Fashola promised to compete in the private sector in addition to repairing federal highways. It should not be allowed to create another inefficient and wasteful bureaucracy. Honduras pegs spending on administration by its Road Maintenance Fund on a maximum 2.5 per cent of its annual budget.
The National Roads (Establishment) Fund Bill 2017 passed by the Senate already prescribes multiple charges, including international vehicle transit charges, levies on heavy duty vehicles, a fuel levy charge of N5 per litre of petrol and inter-state mass transit user, among others. These can be supplemented by tolls on new, alternative highways.
To raise revenues, government should block revenue leakages, radically overhaul the tax system and reform public administration to slash the cost of governance. Pull out from commercial enterprises, accompanied by liberalisation and privatisation, to free funds for roads, water supply, health, education and innovation. Returning tolling to existing highways is a bad idea. Punch