The Road User Charging System

Background

Following Independence in 1990, road sector management became the responsibility of the newly formed Ministry of Works, Transport and Post and Telecommunication. The road sector arrangements at the time were as follows:

  • Roads were fully financed by means of taxes, and priorities were therefore ultimately decided on political considerations;
  • The roads were managed by the DoT (Department of Transport) in the MWTC (Ministry of Works, Transport and Communication);
  • A substantial part of the road works, in particular routine maintenance, was carried out and managed by the DoT with the funds provided for in the force account;
  • Most construction and periodic maintenance works were performed by private contractors by way of competitive bidding;
  • A substantial part of the preparation of documentation for and supervision of the construction and periodic maintenance works was performed by private consultants who were recruited by direct contracting when funded by the State Revenue Fund; and competitive bidding when cofounded by donors. Such consultants were also used for the preparation of long-term plans for the development of the road network [BavenboerB, 2011, Roads Authority (Namibia)].

The Ministry's initial transformation resulted in the separation of communications from its portfolio and the establishment of a new Ministry of Information and Communication Technology. Simultaneously worldwide changes were effected in road sector management, with the key change that perhaps contributed towards the establishment of the RFA being the introduction of earmarked user charges (tolls) and obtaining funds for financing from other sources for road maintenance and/or construction works. Other changes included the assignment of national road management to government agencies, implementation of competitive bidding for road works, increased dependency on consultants within the road sector for road network planning and supervision of roads projects, and the introduction of comparable standards for road management functions [Bavenboer B, 2011, Roads Authority (Namibia)].

Namibia followed suit, which culminated in the 1990s road sector reform and a reorganisation of the DoT. This resulted in the establishment of amongst others the RFA. The RFA was then, through its enabling Act, (Act 18 of 1999) mandated to establish and manage the Road User Charging System (RUCS) and the Road Fund; whilst the Roads Authority (RA) through its enabling Act, (Act 17 of 1999) was tasked to manage the national road network.

Definition

A RUCS as defined in the Road Fund Administration Act, (Act 18 of 1999) means the system providing for independent regulation of road funding in accordance with economic efficiency criteria and full cost recovery from road users comprising, in sequential order, the following:

  1. The determination of the amount of funding for road projects and programmes;
  2. The determination of the manner in which such amount of funding shall be allocated;
  3. The determination, and the imposition, of the types and rates of road user charges (RUCs).

Currently the Namibian RUCS consists of the following RUCs:

-          Fuel Levies

-          Vehicle Registration and Annual Licensing Fees

-          Cross Border Charges

-          Mass Distance Charges

-          Abnormal Load Fees.

Objective of the RUC system

"The Namibian RUC system was developed with the aim of economically recovering the full cost of roads expenditure from road users in an equitable manner. The system determines the amount and manner of funds to be raised from road users in accordance with the 'user pay' principle and consequently determines the road user charges to be imposed. The RUC system was designed to achieve the following objectives:

  • Ensure that revenue needed to provide and maintain roads is raised from road users (including foreign road users) rather than the general taxpayer.
  • Price the use of roads so as to improve economic efficiency in road transport by removing price distortions and charging road users according to the 'consumption' of roads;
  • Promote equity between different categories of road users;
  • Establish a link between supply and demand for transport infrastructure;
  • Increase transparency in the road funding process, and
  • Provide for equal competition between road and rail transport by letting road transport operators pay for their use of infrastructure" (Africon Namibia, April 2004).

The RUC comprises the following:

  • The determination of funding for projects and programmes submitted to the Road Fund Administration (RFA) for funding from the Road Fund (Section 20 [4] of the RFA Act);
  • The determination of the rates of road user charges consequent to the requirements of [a] (Section 18 of the RFA Act);
  • The imposition and collection or road user charges into the Road Fund;
  • The refunding of fuel levies on fuel used off-road (the RFA Act allows for either a rebate or a refund system; the RFA has opted for a refund system);
  • The defrayal of expenses from the Road Fund in accordance with the RFA's approved business plan, and
  • The management of the RUC and the Road Fund by the RFA.

References:

  1. Road Fund Administration Act, Act 18 of 1999, Government Notice number 2217 (dated 22 October 1999).
  2. Bravenboer, Brenda (2011) History of the Namibian Road Sector. Roads Authority of Namibia

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