Sat | Aug 19, 2017

Over 400 submissions to adjust toll rates, but no impact likely

Published:Monday | March 28, 2016 | 3:00 AMChristopher Serju
Ryland Campbell, toll regulator

More than 400 submissions were received from members of the Toll Authority on the published proposed toll rates for different legs of the north-south link of Highway 2000, but their input is not likely to affect the likely final charges for travelling on the new highway.

That is because the formula for arriving at the toll fee is written into the agreement between the concessionaire, Jamaica North South Highway Company, and the Government of Jamaica, according to toll regulator Ryland Campbell.

"That written agreement has a schedule which explains how the toll is calculated, both the consumer price index (CPI) in the United States at a date which is derived from empirical data, and the consumer price index in Jamaica at a particular date, and all that is recited in there and how the formula is applied. When all those things are calculated, you get what is called a capped toll that is the highest it can come out to by the calculation. The concessionaire then makes an application via the toll regulator in respect of what it wishes to propose as the toll," the retired banker told The Gleaner.

He explained that if the toll recommends a lower rate than the fee proposed by the concessionaire and the transport minister and Cabinet approves this, there is a fail-safe clause in the contract that authorises the concessionaire to make a demand on the minister of finance for any shortfall that may arise as a consequence of their lower throughput.

"So put it this way: By granting the rate that they apply for, as long as the calculation is within the capped toll, the concessionaire is on their own and there is no further demand on the Government. The Government has no further legal obligation, but if you reduce it, then the concessionaire has a legal recourse to the minister of finance. It is so recited in the document for the shortfall and it even specifies the period during which the claim must be made and the minister must make good," Campbell pointed out.

Section 19 of the Toll Road Act - guarantee of term or condition of concession agreement - speaks to the Government's obligation to ensure that the toll operator is not likely to operate at a loss.

CLEAR-CUT FORMULA

Campbell explained that in reviewing the toll rates, his actions are, therefore, guided by a clear-cut formula which can stand up to international scrutiny.

"All I need to do is look at the calculations that they make to ensure that the calculations are correct. For example, when reference is made to exchange rate, which they must use in their calculations, this must be the average of the buying and selling rate as published by the Bank of Jamaica at the particular date of reference where the application is made. So nothing is left to chance," he said.

"So there is a connection between the convertibility of the Jamaican dollars which they are collecting and the conversion on a particular date. It's the same thing for the CPI inflation, or whatever you call it, for the US, as published by its own department. So these are records that one has to go to to make sure that what they use as their reference is in fact the correct data to do the calculations."

Transport Minister Mike Henry, in acknowledging that the formula for determining the toll rates is an international standard, appealed for the public's understanding in the issue.

"As long as your dollar keeps devaluing and you are not making any growth, then you have an issue that the toll will always be looking to be increased. And those are the areas that have to be addressed or understood," Henry told The Gleaner on Thursday.