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Modifying toll rates is not feasible

The executive president of the Colombian Chamber of Infrastructure (CCI), Juan Martín Caicedo Ferrer, gave a resounding no to the proposal to modify the toll rate structure, and other provisions contained in a bill that was filed in the Congress of the Republic.

“It must be said that it is an initiative lacking technical support and, of course, unfeasible,” the executive president of the CCI, a union that brings together the four sectors of the infrastructure chain: builders, dealers, consultants and suppliers.

In the edition of the Vehicles section of last Saturday, May 8, the representative to the Chamber Mauricio Toro, one of the co-authors of the project, explained in detail the scope of the proposal, including a minimum distance of 150 kilometers between toll booths, and the reduction of the rate once the concessionaire reverts the work to the State.

In this opportunity, Caicedo Ferrer, explains the reasons for which, in his opinion, this bill is unfeasible.

Toll. Photo: César Melgarejo, El Tiempo

What are those reasons?
In principle, the project proposes to standardize the distance between the country’s tolls today and suggests, from time to time, to locate the toll booths every 150 kilometers. Approach, clearly, disconnected from reality.

Why?
Because building roads in Colombia, a country with such diverse geographical characteristics, not only constitutes a monumental engineering challenge, but, for those same reasons, the projects end up being dissimilar to each other. It is not the same to build a road on a plain or plain, than to run it in a mountain region where, most likely, tunnels or intricate networks of viaducts will have to be built.

What you mean is that our geography has a high impact on costs?
Precisely, those particularities that emerge from each civil work are ultimately the reason why the costs of each project vary considerably, as well as its financial structuring, operation and maintenance. Hence, then, it is inappropriate to standardize the distances between toll booths and, in the same way, it becomes anti-technical to establish a common value between tolls.

What would happen in the hypothetical event that Congress approves the bill?
It would mean a handbrake for infrastructure and, of course, a severe setback for the otherwise virtuous model of concessions. The country would be faced with a setback of decades and would retrace the distance traveled since 1991, when Law 1 was enacted, which, in good time, opened the doors to private capital investment in favor of infrastructure development. Since then, the concessions have allowed the country to overcome a delay of more than 80 years in terms of road infrastructure and, it must be said bluntly: they have led us to have very high competitiveness conditions at the regional and national levels.

Ruta del Sol 3, ANI

Ruta del Sol 3, ANI

Why do you speak of a severe setback for the concessions model?
Because the concessions have been the response to the fact that the State, in effect, does not have enough resources to cover, through public works, the infrastructure needs that the country has to be more competitive. Thus, in the face of this reality, it is necessary to resort to financing from the private sector, national and foreign banks, as well as debt funds and the capital market. In other words, in the concession model, the private sector contributes 100 percent of the resources to build infrastructure. This debt is paid by the concessionaires, usually within a period of 12 to 20 years. Hence, the value of tolls is directly related to the cost of the works and their financing. In that order of ideas, if the project in question succeeds, all this will ruin and I insist: we would take an unforgivable step into the past.

The bill also raises the possibility that once the concessions revert to the State, the toll rate will begin to be dismantled. How viable is that approach?
It is a short-term approach, lacking a vision of the future. Why do I say it? Because it is clear that once the concessions to the State are reverted, the country will have to continue modernizing and, of course, will have to build new roads. This modernization process not only applies to highways, it also applies, for example, to the metro or the Regiotram of Bogotá. So lowering toll rates would result in a condemnation against modernity.

In the users’ feelings there is the conviction that tolls in Colombia are very expensive; And if the rates are compared with those of countries in the region with similar geographic conditions (Ecuador, Peru, Chile), they are right. Why?
We are starting from a false premise. The cost of tolls is not taken out of the hat, as some tend to proclaim. It is the result of a financial structuring, as technical as it is rigorous, which of course stems from the characteristics of each project. In Colombia, unlike Ecuador, Peru or Chile, we must connect the main cities of the country with the distribution and export and import centers. This constitutes an enormous challenge if one takes into account that we must cross three mountain ranges and, to do so, the construction of tunnels, viaducts or bridges is necessary. Consequently, the value of this type of works is much higher than that of the countries mentioned, which obviously do not have three young mountain ranges in their geography.

Girardot-Ibagué-Cajamarca Viaduct.  Photo: ANI

Girardot-Ibagué-Cajamarca Viaduct. Photo: ANI

What would happen if there is no collection of tolls?
Without collection of tolls, the only way to supply that income is through taxes, which would require the processing of various tax reforms. So, is it fair that, via taxes, all Colombians end up paying for the construction, maintenance and operation of the highways, even those who do not use the concessioned roads? Let us not forget, moreover, that our concessional model has become a successful global benchmark for multilateral banking, and also for media of undoubted prestige such as The Economist magazine, which in its January edition highlighted the model of concessions of Colombia.

Finally, what have been the difficulties that the country does not yet operate electronic tolls with a single device (TAG) for all highways?
The initial proposals of the regulation on electronic tolls presented gaps that needed to be clarified. The National Government hired a consultancy to respond to the concerns and the regulatory parameters have improved. From the union we unrestrictedly support the entry into operation of the interoperability system of tolls; However, it is important that the granting entities and the concessionaires advance in the identification of possible additional costs, not foreseen in several projects at the time of signing the contracts, in such a way that the economic balance between the parties is preserved.

Toll.  Photo: Enseyder Gutiérrez, El Tiempo

Toll. Photo: Enseyder Gutiérrez, El Tiempo

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