ROAD CHARGING IN FRANCE

ALAIN FAYARD Warsaw

General directorate of roads June 2006

The views expressed in this presentation are those of the author and not necessarily those of the organizations which the author belongs to

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OUTLINE

THE BACKGROUND PRICING AND FUNDING : THE TRUTH, AND NOTHING BUT THE TRUTH

TO MEET ISSUES AT STAKESTEP BY STEP

AND TOMORROW ?

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OVERVIEW ON FRANCE (in 2006)

60 million inhabitants551,000 km2 surface(Source INSEE)

22 regions100 counties36,500 local districts

• GNP: 1792 billion €• National Government Budget: 271 billion € (Source Minefi)

Private cars: 30,1 millionCommercial vehicles: 6,1 million (Source CCFA)

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A SYSTEM WHICH ACTUALLY WORKS

170 Km 1 500 Km 10 800 Km

IN 2004IN 2006

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FRENCH NATIONAL ROAD NETWORK Expenditures and road-linked

resources Toll roads Free-toll roads Total (8,200 km) (11,800 km*)

(20,000km)Maintenance 1.3 0.5 1.8Investment 2.2 1.0 3.2Total 3 2 5In billion € *out of which 1,800 km toll-free motorways

Gas excise: 26 billion€ (central gvt: 20 billion€) non earmarkedRegistration fee: 2 billion€ (for local auth.) non earmarkedHGV possession fee: 0.23 billion€ non earmarked

Tolls: 6.6 billion€ (HGV: 2.2 billion€, PC: 4.4 billion€) AFITF: 1 billion€ for roads (land planning tax, public domain fee….)

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PRICING : CORE QUESTIONS

Threefold price role : cost recovery demand orientation financing

are these roles compatible? e.g. : High demand = low price (cost recovery)

high price (offer and demand)

Marginal eco. (or social) cost? what about financial balance constraint?

what about “external effects” charges?

What pricing perimeter ? One infrastructure work A network A system

Is it consistent with a market economy?

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INFRASTRUCTURE USE PRICING ?

Where does the money come from ? Tax payer / user

The means toll

“fiscal” / “concession-financing” toll? general taxes specific taxes

The process the general budget the earmarked taxes specific organization (authority, concessionnaire)

The electronic toll collection Techniques: DSRC / GNSS Architecture:where data are proceeded ? Enforcement: barriers are only linked to this issue.

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MAY PRICING BE FREE?

Natural monopoly or dominant position Non contestable market (infra./services) Competitiveness of economy Spatial planning Social equity Tariff elasticity of traffic

---> risk of lower social utility

HGV / private cars

CONTROLLED PRICES / REGULATED MARKET PRICES

WHAT LEGAL SAFETY?

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EUROPEAN DIRECTIVESEUROVIGNETTE : Directive 1999/62/ as modified by directive 2006/38

– Vehicle taxation (nationality) : minimum rates– User charge (time related) : maximum rate– Toll (distance related) : linked to costs of

constructing, operating and developing the infrastructure network

A bureaucratic management of road charging (….in favour of road) No external costs charging (but a proposal asked) Cost recovery (+ mark up no actual financial means)

IS IT CONSISTENT WITH A MARKET ECONOMY?

ENERGY: Directive 2003/96/EC restructuring the Community framework for the taxation of energy minimum levels of taxation to motor fuels

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TO MEET ISSUES AT STAKE (1/3)

Acceptability 1955-1970: public companies 2000: Liber’T, interoperable EFC (cooperation)

1.5 million badges, 3/4 no-cash transactions Level of service, customer’s satisfaction(Les français et le réseau routier : usage, satisfaction et attentes, CREDOC 2004)

Earmarking Concession companies Some attempts of dedicated road funds

91

76

53

91

80

62

9184

66

9284

59

0

10

20

30

40

50

60

70

80

90

100

Highways National roads County and local roads

1988 1992 1996 2004

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EARMARKING Attempts of dedicated road fund ( e.g. FSGT)

Concession companiesBreakdown of financial resources for national road network

27%

56%

32%

53%

0

10

20

30

40

50

60

70

80

90

100

73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01

CONCESSION CIES

LOCAL

AUTHORIT IES

CENTRAL Gvt

0

50

100

150

200

72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01

Volume Index 100 in 1972

Total Resources Government (with the FSGT) Etat

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TO MEET ISSUES AT STAKE (2/3)

Financial resourcesMain impetus through concession companiesFrom 1/3 to 2/3

Mutualization Inside the companies between stretches (70’s) Between companies (80’s) at a nation-wide level Inside groups of companies (90’s)

3,27 €

3,49 €

1,32 €

1,92 €

Construction 3,27€

Taxes and duties 3,49€

Profit 1,32€

Operation & services 1,92€

Breakdown of 10€ collected toll

ASFA, data 2005

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TO MEET ISSUES AT STAKE (3/3)

Regulation• At the beginning, toll fixed by the government

• Since mid’80’s, five-year planning contracts Toll tariff evolution

Investments in infrastructure and services Road safety, social policy and environnemental protection

A CHANGING BUT NOT A WEAKER ROLE FOR GOVERNMENT

Demand management?• Some modulations ( / routes; / time)• Increasing coefficient between HGV and PC• Few urban tolling• To be implemented:

Modulation / pollutionPossible toll without concession (Law 2004-809, CVR L122-4)HGV charging on main highwaysA possible PPP without demand risk and actual resources

(cf. German LKW MAUT + A betrieber Modell / Portuguese SCUT)

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AND TOMORROW? Tolled motorway network

A mature network cash flows

New accounting rules since 2001

profit + corporation tax

AFITF (decree 2004-1317, 2/11/2004)

indirect «mutualisation »

Total privatization in 2006 of c.ies (not of the assets)

(Floatation in Euronext: ASF in 2002, APRR in 2004, SANEF in 2005) What business model?

A tightened central Gvt road networkfrom 38,000 km to 20,000 km (concessions included)

Territorial (transit) and environment-oriented RUC A wider array of tools: concession, RUC without concession, « contrat de partenariat »

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Thank youFor any further information :Alain FAYARD, French Road General Directorate Francesco GAETA, French Road General DirectorateArche Sud F-92055 La Défense Cedex

alain.fayard@equipement.gouv.frfrancesco.gaeta@equipement.gouv.fr