02 3 1 '16 Private Sector and Infrastructure ,IXONAL aBv November 2002 Findings reports on ongoing operational, economic, and sector work carred out by the World Bank and its member governments in the Africa Region It is published penodically by the WORLD BA N K Knowledge and Leaming Center on behalf of the Region The views expressed in Findings are those of the author/s and should not be attnbuted to the World Bank Group http://www.worldbank.org/afr/findings NV AND Road User Charges Model The Model works are managed by different entities. For example, the entire '=he Road User Charges Model road network could include main (RUC) is setup on an Excel 97 trunk roads managed by the main workbook and evaluates, for a par- road agency; secondary roads man- ticular country, the annual fund- aged by states, provinces or mu- ing needs of the entire road net- nicipalities; and urban streets and work and the annual revenues col- avenues managed by municipalities _ lected from user charges. The orurbandistrictcouncils.TheRUC model takes an aggregated view of model estimates the annual costs .0 a country's road network and ve- of operating and maintaining each hicle fleet, evaluating representa- of these networks on a sustainable MW 1_ tive road classes and vehicle types. basis-which means considering -The main model objectives are-the that a network is in good to fair following: condition-without the need of re- - * ensure that road user charges habilitation due to a backlog of de- _ fully cover the costs of operating ferred maintenance. The mainte- and maintaining the inter-urban nance costs are estimated by de- w and urban road networks; fining the most advantageous * ensure that all vehicle classes maintenance strategy for a series cover their attributable variable of road classes. Note that the ac- costs of road usage; tual expenditures may be lower o compare the funding needs of the than these costs, since mainte- country road networks (primary, nance may be underfunded. The * secondary, urban, etc.); maintenance costs are divided into * assess the distribution of rev- annual maintenance, which con- enues from road user charges sists of routine maintenance and ang road nw rk chadis- recurrent annual activities such as trations (main road agency, mu- patching and gradings, and peri- nicialities etc.); ' l odic maintenance, which consists _ .; .I of periodic activities such as over- m define gasoline and diesel levies lays and regravellings. In case of needed to finance a road fund- nc periodic activities, the model esti- . compute financing and revenues mates the annualized average indicators; and costs. Costs are broken down into * estimate the magnitude of fuel fixed and variable costs, which vary 0 . emissions and other externalities, with traffic and traffic loading. For example, for a hypothetical coun- Usually the entire road network try, one has the following consid- of a country is divided into a series ering that the main roads network _ ^ of road networks through a func- includes all paved roads and the tional classification and these net- main unpaved roads and the sec- Vehicle Annual Maintenance charges and lo- ban and urban road networks. The Road Network Length Utilization Fixed Variable Total cal property model computes, for each vehicle (km) (M veh-km (M$/yr) (M$/yr) (M$/yr) taxes. For ex- type, the unit charges needed to be Per yr) Main Roads 8568 1903 28 31 59 ample, one applied to a vehicle type in order to Secondary Roads 8277 76 1.2 1.1 2.3 could have the cover its variable costs, in US cents Streets & Avenues 3448 1162 10 0.7 1.7 following con- per vehicle-km. The model also Entire Network 20293 3141 5 0 4.9 9.9 sidering that all computes the current unit user fixed costs of charges being charged, in US cents Periodic Maintenance OperatingCosts s e c o n d a r y per vehicle-km, which can be com- Road Network Fixed Variable Total Total (M$/yr) (M$/yr) (M$/yr) (M$/yr) (M$Iyr) roads and ur- paredwith the required charges to Main Roads 195 5.7 25.3 2.3 33.4 ban roads are ensure that each vehicle type cov- Secondary Roads 00 0.0 00 0.0 2.3 met by other ers its attributable variable costs Streets & Avenues 6.7 19 8.5 00 102 revenues of road usage. For example, see Entire Network 26.2 7 6 33.8 2.3 46.0 The calcula- table on the right. tions regarding The results indicate that cars, roadnetworkfundingareout- taxis and utilities should be Proposed Financing Table lined below. charged at least US cents 17 per The model estimates road vehicle-km to cover their variable By User By Other user charges revenues col- costs and trucks and buses at least Road Charges Revenues Total Network (M$/yr) (M$/yr) (M$/yr) lected from the following road from US cents 0.21 to 2.68 per ve- user charges instruments: hicle-km. The current user charges, Secondary Roads 334 1.2 23 gasoline levy; based on the license fees and the Ser,ondary Roads 1 1 1.2 2 .3 g y Streets & Avenues 26 7.7 10.2 * diesel levy; gasoline and diesel levies of US Entire Network 371 8.9 46 0 . alcohol levy (whenever ap- cents 20/liter and of US cents 10 Entire etwork37 1 89 46.0plicable); /liter respectively, yield revenues Financin annuallicenfrom road user charges 2 to 13 a Maintenance Needs Financing * annual license fees; times above the required charges. 0 main Roads | . annual load damage fees; Gasoline cars are paying 13 times 8 , | and the requirements, diesel cars 7 c ISecondary Roads tols. times, and trucks and buses from1 r'rtary Roads Source of Financing 2 to 4 times. Thus, in this case, all -Urban Streets RoadUserCharges The characteristics of the vehicle classes cover their variable I Investment Needs < Other Charges vehicles using the road net- costs and one can observe that cars work are defined as well as are paying more than trucks in re- I Main Roads the current unit user lation to their imposed variable Secondary Roads] charges. For example, one has costs of road usage . Tertiary Roads the following for the hypothetical Considering that road user Urban Streets ountry under consideration. charges are collected by the gov- If there are no toll roads or an- ernment but not necessary allo- nual load damage fees, the result- ondary roads network includes ing user rev- _______________________ mostly low volume feeder roads. enues will be An estimate of the annual invest- US$65.3 M Number Driven Standard Fuel ments needed to rehabilitate and per year, of Per year Axle per Consumption develop each network could be op- which is vehicles vehicle tionally added to the recurrent ex- higher than Vehicle Type (veh) (km/yr) (ESA/veh) (I/ veh-km) penditures to define the total fund- the financing ing needs of the entire network. The needs of US$ Car Gasoline 58,801 22,400 0000 0.10 next step is to define the source of 37.1 M per carxDiesel 14,700 25,600 0.000 010 funding. The model considers that year. Thus, Taxi Diesel 1,600 12,800 0.000 010 all variable costs should be met road user Utility 52,273 12,800 0001 0.13 through user charges and the charges fully Light Truck 3,863 14,000 0.030 0.18 through MediumTruck 14,166 14,000 1.150 0.29 model user defines the proportion cover the Heavy Truck 2,576 14,000 1.250 0.43 of fixed costs to be met through costs of oper- Articulated 5,151 19,200 2000 0.53 user charges. The remaining fixed ating and Truck assumed to be met with maintaining ~~~Bus 6,272 28,000 0.750 0.38 costs are assumed to be met with maintaining Total 165802 other revenues, such as parking the inter-ur- Current Annual License Fee Current Fuel Levy ing collected by the or district councils manage the ur- government are 3.3 ban network. It was found that Vehicle Type ($/veh/yr) FuelType ($/liter) percent of the GDP. some main road agencies manage Car (Gasoline) 25 Gasoline 0.20 The emissions of car- up to 50 percent of inter-urban Car (Diesel) 25 Diesel 010 bon dioxide are esti- roads but most of the main road Taxi (Gasoline) 18 mated to be around agencies surveyed manage around Taxi (Diesel) 18 Utility 25 1.2 million tons per 17 percent of the inter-urban Light Truck 30 Resulting Revenues (M$/yr) year and the network roads, which represents around 64 Medium Truck 50 Diesel Levy 30.7 congestion and acci- percent of the inter-urban vehicle Heavy Truck 60 Gasoline 29.6 dent costs are esti- utilization, in million vehicles-km Levy Articulated Truck 90 License Fees 5.0 mated to be around per year. The around 50 percent of Bus 50 Total 65.3 US$24 M per year and inter-urban roads managed by US$ 34 M per year re- some main road agencies, repre- spectively. sent almost 95 percent of the ve- cated to the road agencies in charge hicle utilization. These results are of managing the road net- summarized below. works, the model computes For the countries where the main the revenues being allo- Vehicle Fleet Data Revenues road agencies manage 17 percent cated to each road network I Vehicle Fleet of the inter-urban network, the administrator. For ex- utilization Road User Revenues maintenance needs of the network ample, if currently only US Fuel Consumption | Overall Revenues managed by the main road agency cents 5/liter of the diesel _ represents 35 percent of the total and gasoline levies are be- ESA Loading= Revenues to Transport inter-urban maintenance needs, ing assigned to the main Road User Charges LRevenues to Main Agency while for the countries that man- road agency, the agency re- Fuel Levy , age 50 percent of the inter-urban ceives only US$22.8 M per 1 Revenues from Cities, network, the main roads needs is year, which is not enough Annual License Fee around 90 percent. These results to cover the US$33.4 M per Load Damage Fee show that (a) a distribution of re- year needed to operate and Tolls Road Fund Fuel Levies sources among road networks maintain the main roads based only on the proportion of net- network, yielding a deficit work length, or network utilization of US$10.6 M per year. Lessons learned does not yield the same results as A road fund is often created to a technical evaluation, and (b) if the finance the needs of the main roads The application of the model in distribution of resources is based network. For this purpose, the eight developing countries, mostly only in terms of network utilization, model finds the most desirable set in Latin America, produced some the main inter-urban roads net- of gasoline and diesel levies that initial lessons outlined below, but work receive preferential treatment. would: (a) equilibrate the revenues due to the small sample, care It was found that the annualized with the financing needs; and (b) should be taken extrapolating these maintenance needs (including an- minimize the unit variable user results to other countries. nual and periodic activities) of the costs surplus for each vehicle type. Countries classify their road net- main inter-urban roads networks For example, the model finds that works under different functional vary from US$3,300 to US$8,300 to obtain US$33.4 M per year, a classifications schemes and assign per km-year, with an average of gasoline levy of US cents 8 /liter the responsibility of managing the US$5,500 per km-year. For the and a diesel levy of US cents 7 / networks to different agencies. other inter-urban roads networks, liter will be needed. In this case, Typically there is a national main which consists of mostly unpaved cars will pay 4 to 5 times their vari- road agency in able costs requirements and trucks charge of the main and buses 1 to 2 times their vari- trunk roads and the Network Network Maintenance able costs requirements. states, provinces, length utilization needs Considering that the GPD of the municipalities or (km) (M v-km per (M$ per year) hypothetical country is US$ 2,000 district councils year) M, the road maintenance financ- manage the rest of Some Main Roads 50% 95% 90% ing needed for the main roads is the inter-urban Cases Other Roads 50% 5% 10% 1.7 percent oftheGDPandtheac- road network,while Most MainmRoads 17% 64% 35% tual road user charges revenues be- the municipalities US$2,200 per year Conclusion Paved Roads Road Classes with an average of US$ 10000 40 820 per year. These The model has proven to be a use- 8 9000 road user charges gen- ful tool for an aggregate assessment 8000- \ * * 3 -35 erate revenues that of the entire road network of a 7 > 6000~ \ s el 1ll 30 are, on average, twice country both in terms of the net- i~6000 fudngdveo eE 5000 I -30 the funding needs of work maintenance and develop- <, 4000 2 5 the maintenance of the ment financing side and of the road E 000 1 -2 entire road network, user charges and revenues side.lIt 1000- but that does not mean can be used to evaluate the total 0 1 5 that revenues being flnancing needs of the entire net- 300 600 1000 3000 6000 10000 collected are necessar- work, proper allocation of funds Average Daily Traffic ily being allocated to among road networks, and road [ Fixed Costsn Vanable Costs -Optimal R u9. the road sector. It was user revenues and its distribution also found that cars among network administrations . low traffic roads, the annualized pay, on average, 16 The model is particularly useful to maintenance needs vary from times their attributable variable set-road user charges as a dedi- US$300 to US$2,300 per km-year, costs of road usage and medium cated revenue source for a pro- with an average of US$1,500 per trucks pay 5 time their variable posed road fund. km-year. For the main inter-urban costs. roads networks, the annualized To estimate the network mainte- To learn more maintenance needs represent on nance funding needs, the model 1. Ian Heggie, Rodrigo Archondo- average US cents 1 per vehicle-km, needs as an input the unit mainte- Callao. 1999. Road User Charges while for the other inter-urban nance costs for a series of road Model. Version 3.0. 4/4/99. roads networks, the needs repre- classes, in US$ per km-year, which Transportation, Water and Urban sent on average US cents 5 per ve- are broken down into fixed and Development Department. The hicle-km. The total inter-urban variable costs. The chart above pre- World Bank, Washington, DC annual maintenance needs repre- sents representative maintenance 2. Ian Heggie. 1995. Management sent from 0.2 percent to 1.7 per- costs found for paved roads with and Financing of Roads - An cent of the GDP, with an average of different traffic levels. These costs Agenda for Reform. World Bank 0.8 percent of GDP. were estimated by finding the most Technical Paper Number 275. The The actual diesel levy varies from desirable maintenance strategy per World Bank, Washington, DC. USc 10 per liter to US cents 16 per road class, which is the one that 3. Ian Heggie, Piers Vickers. 1998. liter with an average of US cents yields the least present value of Commercial Management and Fi- 13 per liter, while the gasoline levy total life-cycle society costs (road nancing of Roads. World Bank varies from US cents 13 per liter to agency plus road user costs). Note Technical Paper Number 409. The US cents 57 per liter with an aver- that, for these roads, the fixed costs World Bank, Washington, DC. age of US cents 29 per liter. A pas- represent around 74 percent of the senger car license fees vary from total costs and the chart also shows US$25 per year to US$270 per year the resulting average road rough- with an average of US$ 140 per year, ness if the recommended mainte- while a medium truck license fee nance strategy is implemented. This article was written by Rodrigo varies from US$50 per year to S. Archondo-Callao and first published as SSATP (Sub-Saharan Africa Transport Policy Program) Note No. 28, September 2000. For more information on SSATP Notes, contact: ssatp(worldbank.org