A22 tolls fiasco symptomatic of wider Portuguese roads policy failure

EU declares illegal the charging of tolls on formerly free Portuguese motorways
A new A22 toll charging system to be introduced in 2014 to replace the one implemented less than 2 years ago
Portugal has four times more kilometres of motorway per inhabitant than the UK
FT asks why Portugal spent so much money on motorways only to choke off use with unaffordable tolls


Are the A22 tolls even legal?

The Algarve Daily News highlights a recent European Commission finding that the tolls on Portugal’s formerly free “SCUT” roads are illegal.

The commission was responding to a complaint filed by the Municipality of Aveiro in November 2010 claiming that the introduction of tolls on ex-SCUT roads was “an unjustified infringement of the principle of free movement of people and a flagrant violation of the principle of non-discrimination on grounds of nationality.”

The commission upheld the complaint, made in relation to the former toll-free A17, A25 and A29 highways, concluding that the collection of tolls on these highways is illegal and warning that if Portugal does not change the rules that infringe Community law it will send the case to the EU Court of Justice.

According to Ricardo Oliveira, a partner at PLMJ Practice of European Law and Competition, the opinion from Brussels should apply equally to all SCUT roads since “the legislation in question is general, although the Commission may reasonably be expected be more concerned with the SCUT roads that are used the most by citizens of other member states who travel to Portugal, particularly near the border with Spain.” The A22 clearly meets this criterion.

However, the action has not yet gone to the European Court of Justice and any process would take two or three years to reach a conclusion. If the Portuguese government loses the case, it will be fined but may still persevere with the tolls.

If at first you don’t succeed…

In the meantime, Estradas de Portugal (EP) is already field-testing a new toll charging system to replace the one introduced only at the end of 2011. In June of this year, the President of EP, António Ramalho, publicly admitted that the current payment model was ineffective and unsustainable. Administration costs alone absorb 29% of the toll payments collected.

The new system will render the existing overhead gantries obsolete by installing charging technology at every motorway entrance and exit. Scheduled for deployment as early as 2014, it will eliminate inconsistencies in the amount paid per kilometre over different stretches of motorway.

According to the Algarve Daily News, this is failure on a grand scale. Not only is the government persisting in collecting tolls in the face of heavy economic and legal objections; it is wasting more money on a new system that, while it may save in running costs, will do nothing to make using the A22 more affordable or to redress the damage already done to the struggling Algarve economy.

Portugal mis-spent billions of EU structural funds

The Financial Times columnist Peter Wise questions why Portugal spent so much money on motorways only to choke off the potential productivity gain by charging tolls that people cannot now afford.

A big slice of the €96bn that the EU has provided to Portugal since 1986 in structural and cohesion funds was spent in creating its fine motorway system. There are now a staggering four times the kilometres of motorways per head of Portuguese population than there are in the UK.

But many now believe that far too much was spent on concrete and tarmac, and far too little on education and professional training. Successive Portuguese governments have invested heavily in infrastructures but have failed to tackle the root causes of a lack of international competitiveness. The result is that economic growth stagnated after 2000, and, thanks to overly severe austerity measures, has more recently gone into reverse.

Now, the recently introduced charges are forcing more people off the motorways, nullifying the promised productivity gain. According to the FT, Portuguese road traffic has fallen more sharply than in any other European country over the past fifteen months. No wonder some motorways are empty, when tolls can cost more than diesel over the same journey. New car sales are at a 26-year low.

José Monteiro Limao of Transport Magazine quotes Portugal’s own national road plan of 2000: “A motorway needs 10,000 to 12,000 vehicles per day to justify its construction”. There are currently nine Portuguese motorways that fail to achieve this level.

The Portugal News has a good summary of the A22 tolls situation here.