Highway Tolls

Dead on Arrival

toll station - rio antirio patra greece
Achtung, toll! Who must pay what, and where?
  • Why it matters

    Why it matters

    The German government could miss billions of euro in toll proceeds due to a competition complaint, which would hit the federal government’s budget plans.

  • Facts

    Facts

    • The German government plans to spend €260 billion on transportation routes by 2030.
    • The toll system is projected to generate fewer revenues than expected.
    • A contract awarded to toll operator Toll Collect and worth €200-300 million has come under scrutiny.
  • Audio

    Audio

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To mark the beginning of budget negotiations, German Finance Minister Wolfgang Schäuble, a member of the center-right Christian Democratic Union, had a clear message for his fellow cabinet members: The country could face paralysis unless everyone tightens his belt.

The federal government aims to invest in infrastructure to “strengthen the robustness of growth,” but this can only occur with new sources of income, in Mr. Schäuble’s view. His solution is to collect the money needed from road tolls, to avoid shaving off money from the budget elsewhere.

Still, there is potential trouble ahead. Now that opposition from the European Commission has deprived Germany of half a billion euros in anticipated revenues from a toll on foreign drivers, the government could see a shortfall of another €2 billion ($2.24 billion) starting in July 2018 – money the coalition government had hoped to raised by charging a toll for trucks on all federal roads.

At the moment, there is not even a legal basis for toll expansion.

If the money doesn’t materialize, there will be no more than €12 billion available in 2018 for infrastructure projects, instead of the €14.5 billion that had been hoped for – and most of the money would still be coming out of the federal budget.

However, the government plans to spend about €260 billion, or €17 billion a year, on transportation routes by 2030. This is provided for under the new federal transportation plan, according to information obtained by Handelsblatt from government circles.

Transportation Minister Alexander Dobrindt, a member of the conservative Christian Social Union, is negotiating with toll operator Toll Collect to expand the current toll system. Under the new system, tolls will not only be charged on the 12,700 kilometers (7,891 miles) of federal highways, but on all federal roads, which add up to about 40,000 kilometers. The number of road segments with tolls will increase from 9,000 to 140,000.

The minister’s assignment, however, has triggered a complaint from Kapsch, another toll operator. The company has filed a request for a review of the direct awarding of the contract to Toll Collect.

According to industry circles, the contract the government is now negotiating with Toll Collect is worth €200-300 million. A contract of that size would normally have to be put out for tender throughout the European Union. The Transportation Ministry quotes an expert opinion and is backing Toll Collect. The decision is expected on Thursday.

Observers assume that after the verdict, the case will be brought before the Düsseldorf Higher Regional Court, where it will be continued for several more months. In the meantime, the federal government will be unable to award the contract.

A similar situation developed in 2001, when the federal government wanted to introduce tolls on federal highways. Because of multiple lawsuits and technical problems, the project was delayed for years, and the federal government forfeited billions.

According to industry circles, the commencement of tolls in 2018 is only realistic if Toll Collect continues to expand the system at its own expense. Consortium partners Deutsche Telekom, Daimler and French company Cofiroute would have to provide Toll Collect with an advance, at the risk of losing it in the end.

At the moment, there is not even a legal basis for toll expansion. Altruism will be difficult to explain to shareholders, said industry insiders, especially as the consortium members are still arguing with the federal government before an arbitration board over problems in the introduction of the federal highway tolls. There are more than €5 billion at stake.

The clock is also ticking on another level: the bidding process for the entire system. The operating agreement ends at the end of August 2018. Until then, the federal government must advertise for bids for the Toll Collect share of the system throughout Europe and award a new contract. But according to government circles, the ministry is only now deciding who will provide the legal and economic advice for the invitation for bids.

By comparison, Austria already issued an invitation a year ago for bids for its toll operations beginning in 2019. The contract is to be awarded this summer, to provide the winner with enough time to prepare. Kapsch is the current operator.

The toll has been problematic for the minister, who has already had to reduce toll rates for trucks on federal highways. As a result, the system faces a shortfall of €1.1 billion until 2017. Mr. Schäuble, the finance minister, paid for a portion of the shortfall, but Mr. Dobrindt will have to come up with the rest himself. To do so, he has introduced tolls on another 1,000 kilometers of federal roads and reduced the minimum weight for tolls from 12 to 7.5 tons.

But that isn’t enough for Mr. Schäuble. “In light of the high investment needs,” he wants tolls to apply to vehicles starting at 3.5 tons and to long-distance buses, according to a statement by the ministry, as reported by the magazine Spiegel. The center-left Social Democratic Party is opposed to what this new toll rule, which would hit many independently employed tradesmen and small and medium-sized firms. The opposition and some states, such as Bavaria, also reject the plan.

 

Daniel Delhaes reports on politics, transport and airlines from Handelsblatt’s Berlin office. To contact the author: delhaes@handelsblatt.com.

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