Shadow toll

A shadow toll is a contractual payment made by a government per driver using a road to a private company that operates a road built or maintained using private finance initiative funding.^[1] Payments are based, at least in part, on the number of vehicles using a section of road, often over a 20- to 30-year period. The shadow tolls or per vehicle fees are paid directly to the company without intervention or direct payment from the users.^[2]

On more recent shadow toll schemes in the United Kingdom, payments reduce as the number of vehicles increases, to encourage availability of the road rather than the number of vehicles carried.^[3]

History

First proposed by the UK Government in 1993, shadow tolls have been widely used in the UK and also to a more limited extent in other countries, including Belgium, Canada, Finland, Netherlands, Spain and the United States. Portugal introduced schemes in 1999 but replaced these with the public tolls in 2004.^[4]

The use of shadow tolls in the UK has reduced over time with PFI funded project payments being made based primarily on the availability of the road, and not on the number of vehicles using it. Beyond a certain number of vehicles, the 'toll' paid by the government in more recent schemes is zero.^[3]

Criticism

The World Bank observes that transaction costs 'can be very high' due to the difficulties surrounding legal arrangements and the need for continuous vehicle counts and that use of shadow tolls has led to significant criticism in The Netherlands.^[5]

The Portuguese government removed shadow tolls in 2004 after finding that "payment obligations in connection with the shadow toll system were not compatible with the need to spend on improving and maintaining the other national motorways".^[4]

List of shadow toll roads

Europe

United Kingdom

M1 Lofthouse to Bramham link road^[6]
M40 Denham to Warwick^[7]
M80 Stepps to Haggs^[8]
A1 Darrington to Dishforth^[9]
A1(M) Alconbury to Peterborough^[10]
A13 Limehouse to Wennington (Greater London)^[11]
A19 Dishforth to Tyne Tunnel^[12]
A249 Stockbury (M2) to Sheerness^[13]
A30 / A35 Exeter to Bere Regis^[14]
A417 Gloucester to Cirencester^[15]
A419 Swindon to Cirencester^[15]
A50 Stoke to Derby link^[16]
A55 Llanfairpwll to Holyhead^[17]
A69 Carlisle to Newcastle^[18]

Belgium

A605 / E25 Cointe Tunnel^{[citation needed]}

Finland

VT4 / E75 Järvenpää-Lahti^{[citation needed]}

Netherlands

A9 Wijkertunnel^{[citation needed]}

Spain

Madrid M-45 Road^{[citation needed]}
Rande Bridge

Oceania

Australia

Peninsula Link: Victoria, Australia

Middle East

Israel

Highway 431

North America

Canada

New Brunswick Highway 2 Fredericton to Moncton^[19]

References

^ "FHWA - Center for Innovative Finance Support - Study Reports - Selective Use of Shadow Tolls".
^ "Compelling case for UK road charging, IFS study says". BBC News. 14 May 2012. Retrieved 20 May 2012.
^ ^a ^b "Road Projects" (PDF). FreshFields. Archived from the original (PDF) on 6 December 2008. Retrieved 9 April 2012. In recent UK projects there has been movement away from demand-based payment mechanisms to those which more clearly link the project company's entitlement to revenues, which are still generated by payments from the host government, to its achievement of certain pre-agreed, quantifiable availability, performance and service/output criteria. These criteria might include: 'ride quality', whether sections of the road are closed (in whole or in part) or traffic flow is otherwise impeded, safety performance and/or traffic monitoring.
^ ^a ^b "Portugal: Shadow Toll System is Replaced".
^ "Toll Roads and Concessions". World Bank. Retrieved 8 April 2012. The benefits of this system do not therefore stem from the development of a new source of funds, or from making users internalize the external costs of their travel, but rather from: the Government commitment to continued financial support over several years, the involvement of the private sector and their responsibility for efficient delivery of service... The shadow toll approach does not require traffic to slow for toll collection (and does not require additional land take for widening the road around toll booths). However because it requires the Government and private sector to agree the vehicle counts and because of the difficulties surrounding legal arrangements, the transaction costs can be very high. This has led to significant criticism of the approach in the Netherlands.
^ "M1-A1 Link Road (Lofthouse to Bramham)". Highways Agency. Archived from the original on 1 March 2012. Retrieved 8 April 2012.
^ "M40 Denham to Warwick". Highways Agency. Archived from the original on 6 April 2012. Retrieved 8 April 2012.
^ "M80 Stepps to Haggs, Scotland". Archived from the original on 4 March 2013. Retrieved 8 April 2012.
^ "A1 Darrington to Dishforth". Highways Agency. Archived from the original on 17 April 2010. Retrieved 8 April 2012.
^ "A1(M) Alconbury to Peterborough". Highways Agency. Archived from the original on 27 August 2011. Retrieved 8 April 2012.
^ "DBFO Briefing Pack - 2b - A13 Thames Gateway DBFO project fact sheets". Highways Agency. Archived from the original on 11 November 2010. Retrieved 8 April 2012.
^ "A19 Dishforth to Tyne Tunnel". Highways Agency. Archived from the original on 29 March 2012. Retrieved 8 April 2012.
^ "A249 Stockbury (M2) to Sheerness DBFO Contract". Highways Agency. Archived from the original on 6 April 2012. Retrieved 8 April 2012.
^ "A30 Exeter to Bere Regis". Highways Agency. Archived from the original on 10 August 2012. Retrieved 8 April 2012.
^ ^a ^b "A419/A417 Swindon to Gloucester". Highways Agency. Archived from the original on 4 February 2012. Retrieved 8 April 2012.
^ "A50/A564 Stoke to Derby Link". Highways Agency. Archived from the original on 20 December 2010. Retrieved 8 April 2012.
^ "The shadow A55 toll that must be paid every year and is costing taxpayers millions". North Wales Live / Daily Post. 3 September 2021. Retrieved 24 February 2022.
^ "A69 Carlisle to Newcastle". Highways Agency. Archived from the original on 16 January 2012. Retrieved 8 April 2012.
^ "NEW BRUNSWICK:Tolls Ended on Fredericton-Moncton TR". tollroadnews. Archived from the original on 4 September 2008. Retrieved 8 April 2012. Maritime Roads Development Corp (MRDC), the Dragados-led concessionaire has gotten a check for $20m for compensation, and for the remainder of its 30 year concession it will be paid by the provincial government on a per vehicle basis – 'shadow tolls.' MRDC will install inductive loops in the pavement to count and classify vehicles at four points along the road, each close to the two constructed and two planned toll plazas. Vehicles will be classed as cars and larger vehicles with a shadow toll due MRDC of $4 and $12 for each full passage. This compares to about $6 and $18 real tolls in the concession agreement. There is a cap on the amount of shadow toll revenues, but no downside guarantees. The absence of tolls will encourage traffic on the motorway which will save both distance (29km) and time as compared to existing alternative routes.

External links

About DBFO UK Highways Agency
DBFO UK Highways Agency
Summary of UK Parliamentary questions relating to DBFO roads UK Highways Agency
Design Build Finance Operate Federal Highways Administration
All that money growing on trees FT.com blog March 2012
Criticism of A1 Darlington to Dishforth scheme

External websites in relation to North American shadow tolls

A GUIDEBOOK TO THE BIPARTISAN INFRASTRUCTURE FOR STATE, LOCAL, TERRITORIAL, AND TRIBAL GOVERNMENTS AND OTHER DEPARTMENTS

[1] "FHWA - Center for Innovative Finance Support - Study Reports - Selective Use of Shadow Tolls".

[BBC0512-2] "Compelling case for UK road charging, IFS study says". BBC News. 14 May 2012. Retrieved 20 May 2012.

[FreshFields-3] "Road Projects" (PDF). FreshFields. Archived from the original (PDF) on 6 December 2008. Retrieved 9 April 2012. In recent UK projects there has been movement away from demand-based payment mechanisms to those which more clearly link the project company's entitlement to revenues, which are still generated by payments from the host government, to its achievement of certain pre-agreed, quantifiable availability, performance and service/output criteria. These criteria might include: 'ride quality', whether sections of the road are closed (in whole or in part) or traffic flow is otherwise impeded, safety performance and/or traffic monitoring.

[Portugal-4] "Portugal: Shadow Toll System is Replaced".

[5] "Toll Roads and Concessions". World Bank. Retrieved 8 April 2012. The benefits of this system do not therefore stem from the development of a new source of funds, or from making users internalize the external costs of their travel, but rather from: the Government commitment to continued financial support over several years, the involvement of the private sector and their responsibility for efficient delivery of service... The shadow toll approach does not require traffic to slow for toll collection (and does not require additional land take for widening the road around toll booths). However because it requires the Government and private sector to agree the vehicle counts and because of the difficulties surrounding legal arrangements, the transaction costs can be very high. This has led to significant criticism of the approach in the Netherlands.

[6] "M1-A1 Link Road (Lofthouse to Bramham)". Highways Agency. Archived from the original on 1 March 2012. Retrieved 8 April 2012.

[7] "M40 Denham to Warwick". Highways Agency. Archived from the original on 6 April 2012. Retrieved 8 April 2012.

[8] "M80 Stepps to Haggs, Scotland". Archived from the original on 4 March 2013. Retrieved 8 April 2012.

[9] "A1 Darrington to Dishforth". Highways Agency. Archived from the original on 17 April 2010. Retrieved 8 April 2012.

[10] "A1(M) Alconbury to Peterborough". Highways Agency. Archived from the original on 27 August 2011. Retrieved 8 April 2012.

[11] "DBFO Briefing Pack - 2b - A13 Thames Gateway DBFO project fact sheets". Highways Agency. Archived from the original on 11 November 2010. Retrieved 8 April 2012.

[12] "A19 Dishforth to Tyne Tunnel". Highways Agency. Archived from the original on 29 March 2012. Retrieved 8 April 2012.

[13] "A249 Stockbury (M2) to Sheerness DBFO Contract". Highways Agency. Archived from the original on 6 April 2012. Retrieved 8 April 2012.

[14] "A30 Exeter to Bere Regis". Highways Agency. Archived from the original on 10 August 2012. Retrieved 8 April 2012.

[A417A419-15] "A419/A417 Swindon to Gloucester". Highways Agency. Archived from the original on 4 February 2012. Retrieved 8 April 2012.

[16] "A50/A564 Stoke to Derby Link". Highways Agency. Archived from the original on 20 December 2010. Retrieved 8 April 2012.

[17] "The shadow A55 toll that must be paid every year and is costing taxpayers millions". North Wales Live / Daily Post. 3 September 2021. Retrieved 24 February 2022.

[18] "A69 Carlisle to Newcastle". Highways Agency. Archived from the original on 16 January 2012. Retrieved 8 April 2012.

[19] "NEW BRUNSWICK:Tolls Ended on Fredericton-Moncton TR". tollroadnews. Archived from the original on 4 September 2008. Retrieved 8 April 2012. Maritime Roads Development Corp (MRDC), the Dragados-led concessionaire has gotten a check for $20m for compensation, and for the remainder of its 30 year concession it will be paid by the provincial government on a per vehicle basis – 'shadow tolls.' MRDC will install inductive loops in the pavement to count and classify vehicles at four points along the road, each close to the two constructed and two planned toll plazas. Vehicles will be classed as cars and larger vehicles with a shadow toll due MRDC of $4 and $12 for each full passage. This compares to about $6 and $18 real tolls in the concession agreement. There is a cap on the amount of shadow toll revenues, but no downside guarantees. The absence of tolls will encourage traffic on the motorway which will save both distance (29km) and time as compared to existing alternative routes.

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