The Role of the Private Sector in Operating and Maintaining Road Networks - an International Review



The Role of the Private Sector in Operating and Maintaining Road Networks - an International Review

Authors

RUSSELL C, Steer Davies Gleave, UK

Description

The pattern of organization and funding of road building, maintenance and operation across the world has been changing significantly in the last decade. While traditionally this has been seen as a direct responsibility of government, the combination of an

Abstract

The pattern of organization and funding of road building, maintenance and operation across the world has been changing significantly in the last decade. While traditionally this has been seen as a direct responsibility of government, the combination of an endemic shortage of government funds (actual, as seen in the developing countries, or accounting, as imposed under Maastricht), with a commitment to the introduction of the private sector and its effieiencies has led to a developing reliance on a new private sector construction, maintenance and operation industry.

In a limited number of situations, it has proved possible to fund this construction and operation directly from tolling. Building on the well-established model in countries such as France, where (quasi) private road concession companies have been in operation for some 30 years, there has been an important expansion of the project finance BOT approach for such schemes across the world. However, in the majority of situations - either because of the unwillingness of Government to introduce direct tolling on the project road or because the road cannot generate adequate levels of revenue to fund the construction- governments continue to be involved directly in the fimding of schemes, through capital or revenue subsidies. The form of these subsidies might be determined by the requirement to transfer risk (often driven by government's desire to achieve off-balance sheet funding) which can be achieved through shadow tolls.

Under these conditions, the most significant objective of the restructuring is to transfer from the public to the private sector not only the responsibility for carrying out specified tasks, but also the responsibility for determining what those tasks will be. In this paper, we report on the extent to which such a transfer has been achieved - in the construction of new roads and in the operation and maintenance of existing roads and road networks - across a number of important examples worldwide.

Publisher

Association for European Transport