New Trends in Toll determination for Tolled Road Projects

Performance Payments instead of fixed AnnuityThe annuity model involves the payment of a fixed sum by the Sponsoring Agency to the concessionaire during the concession period to compensate him for the capital cost and operational and maintenance expenses of the project plus a certain percentage of returns thereon. (E.g. The Tuni Anakapalli Annuity Road Project).

International trend in Annuity based revenue model is that rather than paying a fixed sum, The Concessionaire is paid availability payments and performance payments calculated using a pre-agreed formula. This formula is linked to traffic volume, safety, user satisfaction.

S. No. Project Payment Mode1. British Columbia - Okanagan Lake Crossing

Concession AgreementThe Concessionaire is paid availability payments and performance paymentsThe Concessionaire is paid availability payments and performance payments

2. British Columbia, Canada - Sea-to-Sky Highway Improvement

3. Alberta, Canada - South East Anthony Henday Drive

The Concessionaire is paid monthly Capital Payments and Operating Payments

4. Quebec, Canada - Autoroute 25 Concession Project

The Private Partner collects tolls on behalf of Government which it then remits to the Government. The Private Partner is paid a construction fee + an availability fee + a fee based on the levels of revenue achieved, less certain deductions

5. Quebec, Canada - Autoroute 30 Concession Project

Cases with variable annuity payments

Dynamic Toll Rate PricingWith the fast increase in passenger and freight travel demand, traffic congestion has become a persistent problem to the surface transportation network. Internationally congestion pricing emerged as a cost-effective and efficient strategy to mitigate the congestion problem on freeways. Congestion pricing consists in imposing a fixed or variable toll on motorists for using a particular lane or roadway segment in an attempt to influence travel demand by encouraging motorists to either switch to alternative routes or changing their trip time. The concept of dynamic toll rate is well endorsed in US with many toll roads employing this mechanism (“San Diego I-15 Fas Trak” the Orange County, CA,SR-91, the Minnesota I-39, and the I-95 express toll lanes in Florida)

Innovative toll pricingMany countries provide toll concessions to various types of toll road users to promote specific travelling modes (like carpooling or driving eco-friendly vehicles) or to encourage large vehicles to change their travel time to reduce peak hour congestions. Many toll roads in Italy and US provide such concessions to toll road users.