“Toll revenues - Lost stability” read the Power Point presentation earlier this week as Estradas de Portugal (EP) roads chief António Ramalho, disclosed how administration fees on previously unpaid motorways (SCUT) were eating into the company’s already waning profits.
Combined with plummeting road usage and a growing number of users failing to pay tolls, EP chairman, Ant-ónio Ramalho expressed real concern over the sustainability of the company.
This position is now further exacerbated following an investment, approved last week by the cash-strapped government, to spend €111 million on urgent road upgrades and maintenance this year, up from €80 million spent in 2012.
António Ramalho had already explained last month that cars travelling on SCUT motorways without an electronic tagging device cost as much to bill as the amount they pay for using the toll road.
“The system is unsustainable and we hope it doesn’t stay the way it is. If it doesn’t change, we will not have enough money to conserve, preserve and maintain a road network which is considered the fourth best amongst OECD member nations”, Mr. Ramalho argued.
Currently, 29 percent of all monies collected from these motorways are channelled towards administrative fees, which rose from €17 million in 2011 to €42 million last year.
Mr. Ramalho, this week, meanwhile promised a stringent revision of the system, which is expected to come into force after the October municipal elections.
He had earlier this year pledged to have a new system operational by April, but it seems that persistent glitches during testing have resulted in yet another postponement.
Overall, revenue from SCUT motorways plummeted by 74 percent in 2012 on the previous year, EP said, and with traffic figures dropping even further in 2013, there seems to be no apparent end to the rot.
The EP chief openly admitted that the expected revenue from these motorways is “frankly well below those indicated by initial studies” commissioned by the government.
While there is little that can be done to boost revenue from these much-maligned motorways, Mr. Ramalho has announced renewed efforts to obtain money through enforced payments from motorists who use these routes without paying, many of them repeatedly so.
Last year, EP failed to collect a total of €30.6 million from offending drivers.
On average, 19 percent of toll-road users fail to pay for using a SCUT motorway.
The chasing down of these outstanding payments has been handed over to tax officials, who could go as far as ordering police to seize transgressing drivers’ vehicles to secure payment of tolls, though no such action has yet been reported.
Another headache for EP has been that thousands of cars have streamed onto secondary roads across the country since the introduction of tolls on SCUT motorways.
The Algarve, in particular, has seen thousands more cars flood the EN125 while the A22 motorway has seen traffic more than halved.
This has left the Government in a situation where not only has it to pay road operators more to maintain secondary roads (based on ballooning traffic counts) but it has also lost income from toll roads, boycotted by a combination of cash-strapped and angry motorists.
Concerns are now being consistently raised as to the profitability of charging tolls on previously unpaid or so-called SCUT motorways.
Revenue from tolls on SCUT motorways are paid to EP by road operators, who in turn are paid back by the state, based on traffic and monies generated on routes they are contracted to maintain.
The situation is slightly different on secondary routes, but private contractors on roads such as the EN125 have benefitted from an increase in traffic as they too, are paid by the car.
Based on figures from 2012, traffic on the EN125 can expect an increase of around 3,000 cars each day during the summer months. Certain stretches, such as the one between Odiáxere and Estômbar (an alternative to one of the more costlier stretches on the A22) witnessed traffic climb by an average of 5,400 vehicles a day in August.
But the rising demand of the EN125 has not translated into any visible improvements.
The opposite has in fact been true, with the Government cutting back €150 million euros (roughly a third) from the budget the road was allocated even prior to the introduction of tolls.
In recent comments to The Portugal News, the leader of the Commission of Via do Infante (A22) road-users, João Vasconcelos, stressed that “tolls don’t have any future in the Algarve.”
“The introduction of tolls in the Algarve has seen the region go back 20 years and has compounded the economic woes of its people.”