Africa Transport Tech n i cal N ote Road Management Initiative RMI Note no.28 September 2000 Road User Charges Model 22657 Rodrigo S. Archondo-Callao The Model roads managed by states, provinces or The Road User Charges Model (RUC) municipalities: and urban streets and is setup on an Excel 97 workbook and avenues managed by municipalities or ThisTechnical Note presentsa Road evaluates, for a particular country. the urban district councils. The RUC UserCharges ModelU developed by annual funding needs of the entire nlodel estimates the annual costs of theWorld Bankdbased on the road network and the annual rev- operating and maintaining each of Bank Technical Paper number 275 enues collected from user charges. The these networks on a sustainable basis titled "Management and Financing of model takes an aggregated view of a -which means considering that a net- Roads-AnAgenda for Reform" by Ian countrv's road network and vehicle work is in good to fair condition- G Heggie (2). The note gives an fleet, evaluating representative road without the need of rehabilitation due overview of the objectives, structure, classes and vehicle types. The main to a backlog of deferred naintenance. and results of the model by taking as model objectives are the following: The maintenance costs are estimated network, and presents some lessons * ensure that road user charges fully by defining the most advantageous learned while applying the model in cover the costs of operating and maintenance strategy for a series of developing countries. The model will maintaining the inter-urban and ur- road classes. Note that the actual ex- soon be made available in the SSATP ban road networks: penditures may be lower than these external Web Site. - ensure that all vehicle classes cover costs, since maintenance may be RodrigoArchondo-Callao is a their attributable variable costs of underfunded. The maintenance costs Technical Specialist in the World Bank road usage: are divided into annual maintenance, Transport Sector of the Infrastructure * compare the funding needs of the which consists of routine maintenance Group, where he has developed country road networks and recurrent annual activities such as modeling work in support of improved (primary, secondary, urban. etc.): patching and gradings. and periodic sector policy and management. * assess the distribution of revenues maintenance, which consists of peri- The purpose of this series is to from road user charges among road odic activities such as overlays and share information on issues raised networks administrations (main regravellings. In case of periodic activi- by the studies and work of the road agency. municipalities. etc.): ties, the model estimates the annual- SSATP. The opinions expressed in * define gasoline and diesel levies ized average costs. Costs are broien the notes are those of the authors needed to finance a road fund; down into fixed and variable costs, and do not necessarily reflect the views of the World Bank or any of its * compute financing and revenues which vary with traffic and traffic load- affiliated organizations. indicators: and ing. For example, for a hypothetical * estimate the magnitude of fuel emis- country. one has the following consid- For information on these notes, con- sions and other externalities. ering that the main roads network in- tact the SSATP in the Africa Region cludes all paved roads and the main of the World Bank, Washington, Usually the entire road network of unpaved roads and the secondary DC. Internet address: I ssatp@worldbank.org. a country is divided into a series of roads network includes mostly low road networks through a functional volume feeder roads. classification and these networks are An estimate of the annual invest- managed by different entities. For ex- ments needed to rehabilitate and de- ample, the entire road network could velop each network could be option- include main trunk roads managed by ally added to the recurrent expendi- the main road agency: secondary tures to define the total funding needs Sub-Saharan Africa Transport Policy Program (SSATP) * UNECA and The World Bank 2 Transport in Africa Vehicle Annual Maintenance The calculations regarding road network funding are out- Road Network Length Utilization Fixed Variable Total lined below. (km) (M veh-km (M$/yr) (M$/yr) (M$/yr) Main Roads 8568 Per903) 2.8 3.1 5y9 The model estimates road user charges revenues col- Secondary Roads 8277 76 1.2 1.1 2.3 lected from the following road user charges instruments: Streets & Avenues 3448 1162 1.0 0.7 1.7 * gasoline levy; Entire Network 20293 3141 5.0 4.9 9 9 * diesel levy: * alcohol levy (whenever applicable): Periodic Maintenance OperatingCosts * annual license fees: Road Network Fixed Variable Total Total * annual load damage fees; and (M$/yr) (M$/yr) (M$/yr) (M$/yr) (M$/yr) * tolls. Main Roads 19.5 5.7 25.3 2.3 33.4 Secondary Roads 0.0 0.0 0.0 0.0 2.3 Streets & Avenues 6.7 1.9 8.5 0.0 10.2 The characteristics of the vehicles using the road net- Entire Network 26.2 7.6 33.8 2.3 46.0 work are defined as well as the current unit user charges. For example, one has the following for the hypothetical country under consideration. of the entire network. The next step is to define the source of funding . The model considers that all variable costs should be met through user charges and the model user Kilometers Equivalent defines the proportion of fixed costs to be met through Number Driven SAxale per Consumtion user charges. The remaining fixed costs are assumed to vehicles vehicle be met with other revenues, such as parking charges and local property taxes. For example, one could have the fol- Vehicle Type (veh) (km/yr) (ESA/veh) (I/ veh-km) lowing considering that all fixed costs of secondary roads Car Gasoline 58,801 22.400 0.000 0.10 and urban roads are met by other revenues. Car Diesel 14,700 11,200 0.000 0.10 Taxi Gasoline 6,400 25,600 0.000 0.10 Taxi Diesel 1,600 12.800 0.000 0.10 Proposed Financing Table Utility 52,273 12,800 0.001 0.13 Light Truck 3,863 14.000 0.030 0.18 ByUser ByOther MediumTruck 14,166 14.000 1.150 0.29 Road Charges Revenues Total Heavy Truck 2,576 14,000 1.250 0.43 Network (M$/yr) (M$/yr) (M$/yr) Articulated 5,151 19,200 2.000 0.53 Truck Main Roads 33.4 0.0 33.4 Bus 6,272 28,000 0.750 0.38 Secondary Roads 1.1 1.2 2.3 Total 165802 Streets & Avenues 2.6 7.7 10.2 Entire Network 37.1 8.9 46.0 Current Annual License Fee Current Fuel Levy Vehicle Type ($/veh/yr) FuelType ($/liter) Car (Gasoline) 25 Gasoline 0.20 s Maintenance Needs Financing Car (Diesel) 25 Diesel 0.10 Ma Taxi (Gasoline) 18 0 Main Roads Taxi (Diesel) 18 Q Utility 25 = Secondary Roads Light Truck 30 Resulting Revenues (M$/yr) Source of Financing Medium Truck 50 Diesel Levy 30.7 T r Heavy Truck 60 Gasoline 29.6 E Urban Streets Road User Charges Levy -__________________ over Costs Charges Charges Charges (b) minimize the unit variable user costs surplus for each Vehicle Type (c/veh-km) (c/veh-km) Needed Needed vehicle type. For example, the model finds that to obtain Car (Gasoline) 0.17 2.11 Yes 13 US$33.4 M per year, a gasoline levy of US cents 8 /liter and Car (Diesel) 0.17 1.22 Yes 7 a diesel levy of US cents 7 /liter will be needed. In this case, Taxi (Diesel) 0.17 2.14 Yes 12 cars will pay 4 to 5 times their variable costs requirements Utility 0.17 1.50 Yes 9 and trucks and buses 1 to 2 times their variable costs Light Truck 0.21 2.01 Yes 10 requirements. Medium Truck 1.61 3.26 Yes 2 Considering that the GPD of the hypothetical country is Heavy Truck 1.74 4.73 Yes 3 US$ 2,000 M, the road maintenance financing needed for Articulated Truck 2.68 5.77 Yes 2 Bus 1.11 3.98 Yes 4 the main roads is 1.7 percent of the GDP and the actual road user charges revenues being collected by the The results indicate that cars, taxis and utilities should government are 3.3 percent of the GDP The emissions of carbon dioxide are estimated to be around 1.2 million tons be charged at least US cents 17 per vehicle-km to cover Der vear and the network con estion and accident costs their variable costs and trucks and buses at least from US y g are estimated to be around US$24 M per year and US$ 34 cents 0.21 to 2.68 per vehicle-km. The current user charges, rer ear tive The calculations rearding road based on the license fees and the gasoline and diesel levies of US cents 20/liter and of US cents 10 /liter respectively, user charges and revenues are outlined above. yield revenues from road user charges 2 to 13 times above the required charges. Gasoline cars are paying 13 times ess ed the requirements, diesel cars 7 times, and trucks and buses The application of the model in eight developing countries, from 2 to 4 times. Thus, in this case, all vehicle classes cover mostly in Latin America, produced some initial lessons their variable costs and one can observe that cars are paying outlined below, but due to the small sample, care should more than trucks in relation to their imposed variable costs be taken extrapolating these results to other countries. of road usage . Countries classify their road networks under different Considering that road user charges are collected by the functional classifications schemes and assign-The government but not necessary allocated to the road responsibility of managing the networks to different agencies in charge of managing the road networks, the agencies. Typically there is a national main road agency in model computes the revenues being allocated to each road charge of the main trunk roads and the states, provinces, network administrator. For example, if currently only US municipalities or district councils manage the rest of the cents 5/liter of the diesel and gasoline levies are being inter-urban road network, while the municipalities or district assigned to the main road agency, the agency receives only councils manage the urban network. It was found that US$22.8 M per year, which is not enough to cover the some main road agencies manage up to 50 percent of inter- US$33.4 M per year needed to operate and maintain the urban roads but most of the main road agencies surveyed main roads network, yielding a deficit of US$10.6 M per manage around 17 percent of the inter-urban roads, which year. represents around 64 percent of the inter-urban vehicle A road fund is often created to finance the needs of the utilization, in million vehicles-km per year. The around 50 main roads network. For this purpose, the model finds the percent of inter-urban roads managed by some main road most desirable set of gasoline and diesel levies that would: agencies, represent almost 95 percent of the vehicle (a) equilibrate the revenues with the financing needs; and utilization. These results are summarized below. 4 Transport in Africa Network Network Maintenance Paved Roads Road Classes length utilization needs 10000 4.0 (km) (M v-km per (M$ per year) v 9000 year) 0 8000 3.5 Co7000 Some Main Roads 50% 95% 90% ? 6000 30 Cases Other Roads 50% 5% 10% 5000 Most Main Roads 17% 64% 35% c @ 4000 2.5 Cases Other Roads 83% 36% 65% X 3000 E 2000 2-0 C- 1000 0 For the countries where the main road agencies manage 300 600 1000 3000 6000 10000 17 percent of the inter-urban network, the maintenance Average Daily Traffic needs of the network managed by the main road agency represents 35 percent of the total inter-urban maintenance a Fixed Costs EVariable Costs Optimal Roughness needs, while for the countries that manage 50 percent of the inter-urban network, the main roads needs is around To estimate the network maintenance funding needs, 90 percent. These results show that (a) a distribution of the model needs as an input the unit maintenance costs resources among road networks based only on the for a series of road classes, in US$ per km-year, which are proportion of network length, or network utilization does broken down into fixed and variable costs. The chart above not yield the same results as a technical evaluation, and (b) presents representative maintenance costs found for paved if the distribution of resources is based only in terms of roads with different traffic levels. These costs were estimated network utilization, the main inter-urban roads network by finding the most desirable maintenance strategy per receive preferential treatment. road class, which is the one that yields the least present It was found that the annualized maintenance needs value of total life-cycle society costs (road agency plus road (including annual and periodic activities) of the main inter- user costs). Note that, for these roads, the fixed costs urban roads networks vary from US$3,300 to US$8,300 per represent around 74 percent of the total costs and the chart km-year, with an average of US$5,500 per km-year. For the also shows the resulting average road roughness if the other inter-urban roads networks, which consists of mostly recommended maintenance strategy is implemented. unpaved low traffic roads, the annualized maintenance needs vary from US$300 to US$2,300 per km-year, with an Conclusion average of US$1,500 per km-year. For the main inter-urban roads networks, the annualized maintenance needs The model has proven to be a useful tool for an aggregate represent on average US cents 1 per vehicle-km, while for assessment of the entire road network of a country both in the other inter-urban roads networks, the needs represent terms of the network maintenance and development on average US cents 5 per vehicle-km. The total inter-urban financing side and of the road user charges and revenues annual maintenance needs represent from 0.2 percent to side. It can be used to evaluate the total financing needs of 1.7 percent of the GDP with an average of 0.8 percent of the entire network, proper allocation of funds among road GDP networks. and road user revenues and its distribution The actual diesel levy varies from USc 10 per liter to US among network administrations . The model is particularly cents 16 per liter with an average of US cents 13 per liter, useful to set road user charges as a dedicated revenue while the gasoline levy varies from US cents 13 per liter to source for a proposed road fund. US cents 57 per liter with an average of US cents 29 per liter. A passenger car license fees vary from US$25 per year to US$270 per year with an average of US$140 per year, while To learn more a medium truck license fee varies from US$50 per year to US$2,200 per year with an average of US$ 820 per year. l. Ian Heggie, RodrigoArchondo-Callao. 1999. Road User Charges These road user charges generate revenues that are, on Model. Version 3.0. 4/4/99. Transportation, Water and Urban average, twice the funding needs of the maintenance of Development Department. The World Bank, Washington. DC the entire road network, but that does not mean that 2. Ian Heggie. 1995. Mlanagement and Financing ofRoads - An revenues being collected are necessarily being allocated to Agenda for Reform. World Bank Technical Paper Number 275. the road sector. It was also found that cars pay, on average, The World Bank, Washington, DC. 16 times their attributable variable costs of road usage and 3. Ian Heggie. Piers Vickers. 1998. Commercial Management and medium trucks pay 5 time their variable costs. Financing of Roads. World Bank Technical Paper Number 409. The World Bank, Washington, DC.