Getting the shorter end of toll roads

All the noise about toll fee increases makes one wonder who is getting the shorter end of the toll road deal. Who is taking who for a ride? The toll road users? Or Citra Metro Manila Tollways Corp. (Citra) and the other project contractors?

It looks like both sides have reasons to squawk and squeak.

In today’s fast-paced world, toll roads are a crucial component of a country’s infrastructure system. They are the key to providing swift movement of goods and services within the country, spurring economic growth in even the remotest parts of the archipelago.

Recognizing this, government vowed to rejuvenate the toll road network in the Philippines through the build-operate-transfer law of 1991. Some 800 kilometers of new road were earmarked for construction. By 1999, some 280 kilometers were awarded; so far, though, only 24 kilometers have been built.

The aging North Luzon Expressway (NLE) and the over-burdened South Luzon Expressway (SLE) continue to bear the brunt of land transport of goods from the northern and southern parts of the country. Since toll roads were introduced in the Philippines in the late 60s, there have been only 77 kilometers of new toll roads paved and "operationalized" during the last decade.

Part of the completed roads is the elevated six-lane Metro Manila Skyway built by the Citra, and the 22-kilometer Southern Tagalog Arterial Road (STAR) solicited by the STAR Infrastructure Development Corp. (SIDC).

In the Skyway, though, that was rocked by a barrage of issues and affected the project’s financial viability.

Citra’s contract involves three stages, the first stage entailing the construction of the elevated section from Buendia to Bicutan; and the rehabilitation of the ground level section from Sucat to Alabang and Magallanes to Bicutan.

In 1998, the northern phase of stage one of the project was completed, and toll rate increases inadvertently followed. This was met by vehement public protest, largely from users of the rehabilitated ground level. A temporary restraining order briefly prevented Citra from collecting the new fees.

In the succeeding years, Citra would be attacked by demonstrations every time it attempted to pass on toll rate hikes. Because the Skyway relies only on collected tolls from users to pay off loans and provide its investors a return on investment, Citra encountered a fair amount of financial problems.

Furthermore, toll rate increases granted by the Toll Regulatory Board did not match up with the reality of a rapidly deteriorating local currency. When Citra started construction in 1995, a dollar was worth only P26. Today, the peso has depreciated by 100 percent.

Escalating fees amidst deteriorating service

Citra claims that many of the 200,000 vehicle owners patronizing the South Luzon Tollway (SLT) and the Skyway have expressed satisfaction over the much-improved situation of the toll road sections. This was expressed in terms of savings in time and vehicle operating costs.

Yet, this poll is difficult to accept hook, line and sinker especially when one is stalled for uncomfortably lengthy periods at the exit plazas of the Skyway especially during the rush hours. This just doesn’t do justice to the fairly expensive toll fee charged for using the elevated speedway.

Even at the ground level, a heavy downpour is a warning alarm for the SLE motorists to avoid using the toll roads. There have been a number of vehicles that just literally drowned after getting marooned in some areas of the at-grade roads.

The E-Pass system, which has been availed of by some 40,000 motorists, similarly fails to provide the promised quick exit service. As a result, many E-Pass holders reportedly have stopped using their tags since they get stuck in traffic anyway, and even encounter problems reloading credit occasionally.

While Citra consistently points out that motorists have a choice of either using or not using toll roads, users argue that the benefit they derive from using the tolled system is not commensurate to the fees they pay.

Citra, of course, counters that it is not getting enough from the low toll fee collections. The unfinished Alabang to Bicutan elevated roadway that significantly contributes to the slow exit problem will definitely require new investments that may not be forthcoming if rates remain at current levels.

Much, much more capital is needed if the plan to complete the whole elevated road system – a total length of 35 kilometers connecting the north and south Luzon expressways, and traversing six cities and municipalities of Metro Manila.

It is of some comfort though that Citra continuously assured the government that it will complete the mega-project. But like every private-public sector partnership, it will need the full cooperation of the government.

One blatant problem to the smooth working relationship of both Citra and the government – and the success of the project – is the lack of clear and transparent guidelines to raising toll rates. As long as road users perceive that they are paying more than what the contractor has spent to construct or rehabilitate the thoroughfares, pricing will continue to be a contested issue.

On the other hand, the private contractor must make an effort to improve its service to customers. Citra needs to provide some solid solutions to persistent problems. The ineffectiveness of the E-Pass lanes has been cloyingly annoying to those who have bought the expensive tags; the slow-moving exit lanes at the Skyway during peak hours negates the high toll use charges.

No followers on Citra’s tough track

If there are very few private investors interested in participating in the remaining 600 kilometers being offered for toll road concession, the rough stretch that Citra is currently traveling on could be one major disincentive.

Toll road fee increases continue to be a sensitive topic and expect Citra’s difficulties to be exacerbated now that elections is just around the corner. Increasing toll fees, just like electricity and water rates, is too a hot political potato. Whether raising rates is justifiable or not, is no longer an issue. Our political leaders from top to bottom will, at this time, only act "with the voters’ interest at heart."

Politics, politics, and more politics.

Should you wish to share any insights, write me at Link Edge, 4th Floor, 156 Valero Street, Salcedo Village, 1227 Makati City. Or e-mail me at [email protected]. If you wish to view the previous columns, you may also visit my website at http://bizlinks.linkedge.com.