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Letter of the Day: Explore game-changers in toll rate pricing

Published:Monday | March 21, 2016 | 12:00 AM


Toll roads are not new phenomena. They have been around for almost three millennia; and in Jamaica for more than a century, as evidenced by the number of places in the country named Toll Gate.

The guiding principle in implementing toll fees is to help recoup the cost of road or bridge or tunnel construction and maintenance of such infrastructure. The intent is to apply rates that are adequate for maintenance and not onerous to the users of the road, etc; for if the latter situation exists, alternative routes may be used, thereby defeating the purpose for which the infrastructure was originally built.

Treating with the developer recouping construction costs, this is generally a medium- to long-term venture measured in decades rather than in a few years. There is no argument whatever that companies expect to get return on their investments, but there is a variety of constructs that may be employed to not only recoup costs but make a profit on the investment.


Build-Operate-Transfer system


One example is the Build-Operate-Transfer system. Private companies build the roads and are given a limited franchise to operate them. Ownership is transferred to the government when the franchise expires. This type of arrangement is prevalent in places like Australia and many countries in Asia.

A variant is the original franchise holder selling its interest to another entity, even before the expiry of its franchise, as in the case of Sangster International Airport, where the initial majority shareholder of MBJ Airports Limited sold its interest to another entity after 12 years of its 30-year concession agreement with the Government of Jamaica.

As a people, we deserve the best that is possible to have, given the various serious and real constraints that are extant; but I have always been convinced that our Government can do better in ameliorating the austere conditions that we confront.


Give rates serious consideration


In this instance, all that I will ask and hope for is that serious consideration be given to the toll rates that have been proposed. To this end, I would ask that the pricing, charging and collection methods all be carefully examined with a view to achieving efficiencies leading to rate reduction, which would redound to the benefit of the users of the North-South link to Highway 2000.

There are as many permutations as the toll regulator is willing to be creative and open to the possibilities. A serious exploration of technology could be the game-changer.

I am confident that it is not beyond the collective capacity of the regulator and the responsible minister to arrive at a solution that is reasonable to both China Harbour Engineering Company and the users of the toll road.