New toll calculation method for BOT price of VCCI: Transportation companies still confused

VCN- The Vietnam Chamber of Commerce and Industry (VCCI) has issued a written comment on the draft Circular amending the Circular No. 35/2016/ TT-BGTVT stipulating the maximum service price of land use for business purposes under the Ministry’s management. Accordingly, the VCCI has proposed a new toll calculation method, but according to some transport companies, this method is not optimal.
new toll calculation method for bot price of vcci transportation companies still confused
The proposal of the VCCI should be studied further before being implemented in practice. Photo: Bui Nu.

There are many inadequacies in the current calculation method

The VCCI said that the method of determining maximum prices using BOT services is very inadequate and proposed a new maximum toll calculation method. In particular, the entire route charge (turn-by-turn pricing) is often applied to open toll collection projects and road tunnel projects. This method does not pay attention to the length of the route, the quality of roads, the speed and the travel time before and after the road project comes into operation...

Another method is based on the length of the road which is usually applied to closed toll collection projects. Although the price has been determined based on the length of the route, the factors of road quality, speed and duration of traffic have not been considered yet.

Thus, this method seems to be too general, which can cause many social consequences. For example, when applying the method of entire route charge, the distance between the toll stations must be at least 70km as stipulated in the Article 2.2.b of Circular 159/2013/ TT-BTC. However, this provision also allows a distance shorter of less than 70 km when it is approved by the competent authorities. As a result, this rule can lead to the condition that a 30km long road is also charged as a 100 km long road.

At the same time, the two methods do not solve the problems of overcharging by some road rehabilitation and maintenance projects. In case where the old road is good, the investor only renovates and enhances the road, but collecting the maximum level is unreasonable. The reason comes from the base toll calculation that completely ignores the quality factors of traffic before implementing the project.

In this situation, the VCCI has proposed to apply the method of basing on the cost saved by each vehicle travelling on the new road. Accordingly, related parties must calculate the average transportation cost of a vehicle when travelling from A-B on the old road, including depreciation costs, fuel costs and travel time costs… after the project comes into operation, the average transportation cost of the vehicle travelling from A-B will be reduced. Thus, thanks to this road project, the vehicle owner benefit from a “transport cost saved”. The project owner is allowed to collect service charges at a certain percentage of the cost savings, but the price is never allowed to exceed the cost savings.

The new method does consider the risks of transport enterprises

Regarding the new toll calculation method for BOT price, Mr. Nguyen Van Thanh, Chairman of the Vietnam Automobile Transportation Association said that, he fully supports the plan because it will help transport enterprises pay fees at an “acceptable level”. This is due to the project owners being only allowed to collect 50% of what vehicle owners entitlement, thus, the vehicle owners will always benefit by 50% of the remaining value.

However, about the detailed calculation, according to Mr. Thanh, it is necessary to have research and clarification. Because, as per the proposal of the VCCI, if the average cost for a 4-10 ton truck travelling from A-B is 500,000 VND, after having a road project, this cost is reduced to 300,000 VND, which means this truck will benefit by 200,000 VND. The State has set a maximum charge rate of less than 50% of the cost savings. Thus, the investors can only collect at the maximum price of 100,000 VND.

But taking a specific example, before having the highway, the transport companies had to take 12 hours from Hanoi to Lao Cai, now it is just 4-5 hours. Thus, the companies save half of the travel time, but the problem is how to calculate the specific cost savings, what’s included? It is hard to quantify the cost savings, and if it is quantifiable, it will be difficult to convince the transport companies. "Besides, the use of used cars and new cars will also have a difference in cost savings (the level of fuel consumption, the abrasion of machinery...), so this calculation needs to be studied further”, Mr. Thanh said.

Agreeing with Mr. Thanh, Mr. Nguyen Duc Chinh, director of Duc Chinh Trading Company LTD., added that the concept proposed by the VCCI is very good, but the way it will be implemented in practice should have further study. According to Mr. Chinh, the current method of calculating BOT price just satisfied investors but did not convince the transport enterprises. Remarkably, in the VCCI's new proposal, the risk factor for transport enterprises is not taken into account, as this is a potentially risky activity. In particular, according to Mr. Chinh, for existing roads, BOT should be removed, if not, it should only collect fees for regular maintenance.

By Xuân Thảo/ Kiều Oanh

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