LAST UPDATE | 29 Nov 2022
WHILE GOVERNMENT ANNOUNCED that it would intervene to defer increases in toll charges on eight motorways for six months, TII Chief Executive Peter Walsh has said this evening that an “awful lot of discussions are yet to go on and I don’t want to pretend otherwise”.
Coalition leaders met last night and agreed that the increases will be delayed until 1 July, at a cost of €12.5 million.
However, appearing before Oireachtas Transport Committee, Walsh said “we are saying the cost of the deferral is yet to be determined”.
He explained that figures were provided to the Department of Transport that the toll increase would raise €12.5 million – but Walsh said this evening that costs associated with deferring the increase could be more.
“We don’t want to give the impression we can get this over the line for a certain number… we want to make sure there is an understanding of this,” he added.
Walsh said “I don’t want to tell the committee that we have this sorted”.
Tolls were set to rise from 1 January to their maximum rate due to an increase in inflation, which provoked anger from politicians as citizens grapple with the surging cost of living this winter.
Agreement needed
When asked by the committee chairperson Kieran O’Donnell whether there is agreement in principle, Walsh said the eight different toll operators must agree to deferral.
Cathal Masterson, TII Director of Operations said that he had been in contact with the operators today about the matter, stating they only heard about the decision of the deferral at 10am this morning.
He explained there are eight different contracts and if any one of those operators decide not to agree, they are entitled to levy the index-linked toll charge on 1 January.
When asked by O’Donnell when it can be agreed with all operators, Masterson said the operators agreed they would work at “breakneck speed” but that the board members of each operator will have to meet to sign off on the decision.
Walsh said he did not want to tell the committee that a decision will be forthcoming quickly, as operators might also need lenders approval also.
When O’Donnell asked if absolute clarity can be given to the public by the end of the week, Walsh said no.
Masterson said the dates of the board meetings are being set for mid-December. O’Donnell said that such a date was very close to Christmas, and asked if there was a way to expedite matters and bring forward board meetings.
“We are right up against Christmas, it is way too tight,” said O’Donnell.
The Government vowed to examine the looming rises after the issue was raised at Cabinet last week.
Explaining the increases, Transport Infrastructure Ireland (TII) said legislation links toll costs to the Consumer Price Index (CPI).
TII Chief Executive defended the controversial increases to prices in nine toll stations.
In his opening statement, Walsh told the committee members that TII receives approximately €200 million every year from the 10 national toll stations in Ireland – eight of which are operated by way of public-private partnership (PPP). The other two, on the M50 and the Port Tunnel, are operated by TII.
Walsh said: “This revenue is used to fund the asset renewal, operation and maintenance of the national road network. The 5,300km of national road network is essential to the economic and social life of the country.
“The network has an asset value of €31 billion (as assessed in 2019). The asset renewal, operation and maintenance of the network requires approximately €600m annually. The Department of Transport provides the balancing €400m from general taxation.
“This represents 2% of asset value and is barely adequate to maintain asset value.”
Walsh told the committee that revenue from the eight PPP toll stations is used to repay loans raised to fund the construction of the roads, as well as funding the operation and maintenance of motorways and dual carriageways.
He also noted that the TII does not have the right to unilaterally change the way the toll rates for these eight PPP concessions are revised. “Any proposed change would have to be the subject of negotiation.
“Negotiations of this kind could take many months, if not years, to successfully conclude.”
Transport Committee chairperson Kieran O’Donnell and Fine Gael Senator Jerry Buttimer asked why a red flag didn’t go up that this might not be the right time to roll out the increase.
Masterson said “congestion is no one’s friend”, stating that one way to reduce the numbers of cars on the M50 is to increase the toll charge. O’Donnell said he found that policy difficult to accept, stating that many people use the M50 out of necessity, not as a luxury.
Masterson said it is a confusing concept to explain, but stating the “medicine may not taste very nice” but the pricing mechanism is seen as a solution to congestion.
Walsh said should road users continue believe that they should not bear the costs the maintenance of the M50 will have to come from general taxation.
Minister for Agriculture Charlie McConalogue said the Government is striking the “appropriate balance” of recognising the cost pressures the public are under.
“I think it’s striking the right balance in terms of recognising the prospect, particularly the prospect over the next few months, where people’s energy levels are higher and dealing with the issue,” he added.
Prices can’t rise more than the rate of inflation and all nine roads will increase their tolls by the “maximum” level possible.
Figures show the CPI rose by 9.2% between October 2021 and October this year, up from an annual increase of 8.2% in the 12 months to September.
Walsh’s statement says: “In the event that a freezing of toll charges is agreed, the contractual entitlement to the index linking of toll charges would still exist. If inflation continues to rise, this will result in rebalancing of, and consequentially, larger increases to, toll charges in January 2024.”
“Any freezing of toll charges would also reduce the amount of money that TII receives under the revenue share mechanism of the PPP contracts.”
TII previously announced that they do not plan on changing tolls for the Port Tunnel but the M50′s tolls will rise by 20 or 30 cent depending on the vehicle category.
Tolls were multiplied by the 8.9% rate of inflation and then rounded to the nearest 10 cent.
A car on the M50 with a pre-registered tag will cost €2.30 from January, up from the current €2.10 charge.
The biggest change for drivers will be for those travelling the M50 in a car that hasn’t been registered, a current cost of €3.20 that will rise to €3.50.
Walsh will tell the committee that freezing M50 toll rates would lead to a reduction in revenue of approximately €13 million. “That reduction would have to be made up from general taxation as the costs of asset renewal, operation and maintenance of the national road network is subject to the cost increases caused by inflation.”
Additional reporting by Christina Finn and PA
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