102124 On the Move a look on the transport sector’s management in Chile, Finland, Morocco, South Africa, and South Korea. Table of Contents Preface . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Acknowledgement Disclaimer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Glossary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Summary: How the transport sector is organized in case study countries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 1. The Case Studies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 2. Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 What is governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Significance of governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 State regulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Structure of paper . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 3. Transport Governance at the Ministry Level . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Chile . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Finland . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Morocco . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 South Africa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 South Korea . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Common themes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 4. Ports. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Organization and management of ports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Financing of the port sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 Port concessions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 Economic regulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 Performance of the ports sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 5. Railways . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 > Horizontal and vertical separation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 > Lines of business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 > Railway concessions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 Organization and management of railway systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 Funding of the railway sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 Performance of railway sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 6. Roads . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 Organization and management of roads . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 Funding of roads . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 > Toll roads . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 > Public-private partnerships . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 > Road user charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 Performance of the road sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 7. Public Transport . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 Management and organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 Funding for public transport . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 Performance of public transport . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 8. Lessons Learned . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 Fh[\WY[ This paper originated in a World Bank study funded as a Reimbursable Advisory Services contract with J^_ifWf[heh_]_dWj[Z_dWMehbZ8WdaijkZo\kdZ[ZWiWH[_cXkhiWXb[7Zl_iehoI[hl_Y[iYedjhWYjm_j^ the Ministry of Transport and Communications, Oman. The aim of the study was to identify more efficient j^[C_d_ijhoe\JhWdifehjWdZ9ecckd_YWj_edi"EcWd$J^[W_ce\j^[ijkZomWije_Z[dj_\oceh[[\ÓY_[dj institutional and governance structures to manage the transport sector in Oman. It encompassed road _dij_jkj_edWbWdZ]el[hdWdY[ijhkYjkh[ijecWdW][j^[jhWdifehji[Yjeh_dEcWd$?j[dYecfWii[ZheWZ jhWdifehj" maritime transport, jhWdifehj" railways, cWh_j_c[ transport, hW_bmWoi" and WdZ road-based heWZ#XWi[Z public fkXb_Y transport. 7l_Wj_ed and jhWdifehj$ Aviation W_hfehji were WdZ airports m[h[ excluded from the scope of the study. [nYbkZ[Z\hecj^[iYef[e\j^[ijkZo$ 7dearly An [Whbopart of fWhj the e\ study j^[ consisted ijkZo e\institutional of an Yedi_ij[Z review Wd _dij_jkj_edWb of transport h[l_[m sector e\ jhWdifehj organization i[Yjeh in select eh]Wd_pWj_ed _d countries. This may be of interest to transport sector political leaders, public officials, and their advisers i[b[YjYekdjh_[i$J^_icWoX[e\_dj[h[ijjejhWdifehji[Yjehfeb_j_YWbb[WZ[hi"fkXb_Ye\ÓY_Wbi"WdZj^[_h who may be contemplating the assessment or strengthening of transport sector governance in their WZl_i[him^ecWoX[Yedj[cfbWj_d]j^[Wii[iic[djehijh[d]j^[d_d]e\jhWdifehji[Yjeh]el[hdWdY[ own countries. _d j^[_h emd Yekdjh_[i$ J^[ MehbZ 8Wda ^Wi fh[fWh[Z j^_i Z_][ij e\ j^[ ][d[hWb ÓdZ_d]i e\ j^[ YWi[ ijkZ_[iWdZ[nj[dZi_jij^Wdaije7^c[ZX_dCe^Wcc[ZX_dIWb_cWb#<kjW_i_"C_d_ij[he\JhWdifehjWdZ Any findings, interpretations, and conclusions expressed herein are those of the authors and do not 9ecckd_YWj_edi"\ehf[hc_ii_edjefkXb_i^_j$ necessarily reflect the views of the World Bank nor of the government of Oman. Neither the World Bank, nor the government of Oman or the authors guarantee the accuracy of any data or other information contained in this publication and accept no responsibility whatsoever for any consequence of their use. ) Acknowledgement Disclaimer This report A World Bankwas produced technical by a team World that Bank team included Ziadled by Ziad Nakat Nakat (Transport (Transport Program Coordinator Program Coordinator for for GCC and the Task Gulf Team Cooperation Council Leader), Fahad B KH and Senior Transport D Almarzouq (Junior Specialist) Professionaland including Officer), Paul Paul Amos Amos (Transport (transport Strategy strategy and and Policy), policy), Robin Richard Carruthers Bullock (Transport (railways), Robinand Logistics), Carruthers Asif Faiz (transport (Roads and and Road logistics), Faiz (roadsPaul Asif transport), and Kent road (Ports Paul Kent Richard and Maritime), transport), (ports andBullock (Railways), maritime), RichardPodolske and Richard (Public transport) Podolske (public Transport), Richard Frederick prepared the work (Governance) summarized in and this paper. Kim (Transport). Jinkyung Any team The could findings, not have produced interpretations, this report without and conclusions theherein expressed are support excellent and those of cooperation the of do Omani authors and not counterparts, thethe through necessarily reflect various views of thediscussions, World Bank. consultations, and information Neither the World provided. Bank nor the authors guarantee the accuracy of any data or other information contained in this publication and accept no responsibility The team would whatsoever therefore for any like to express consequence of their its use.deep gratitude to His Excellency Dr. Ahmed bin Mohammed bin Salim Al Futaisi, the Minister of Transport for his leadership and vision. Many thanks are also extended to Eng. Salim bin Mohammed bin Abdullah al Nuaimi, Undersecretary for Transport, and Mr. Said bin Hamdoun bin Saif Al Harthi, Undersecretary for Ports and Maritime Affairs, for their guidance and insights. The team would like to also thank Eng. Hanan Al Rahbi, General Director for Studies, and Mr. Affan Al Akhzami, Director of Planning and Development of Investment for the valuable discussions, time, and efforts they have provided to coordinate this study within the Ministry of Transport. The team would also like to recognize the valuable meetings and contributions it received from the Supreme Council of Planning, the Ministry of Finance, the Ministry of Commerce and Industry, the Ministry of Civil Services, the Ministry of Regional Municipalities and Water Resources, the Ministry of Legal Affairs, the Municipality of Muscat, the Municipality of Dhofar, the Royal Oman Police Oman, the National Transport Company, the Omani Road Transport Association, the Directorate General of Customs, Sohar Port/Free Zone Company, the Chamber of Commerce, and the Research Council. 4 Glossary AADT Average Annual Daily Traffic ADM Société Nationale des Autoroutes du Maroc (Morocco) AMDL Moroccan Agency for the Development of Logistics competitiveness DBFO Design-Build-Finance-Operate and Transfer concessions DFI Direct Foreign Investment DoT Department of Transport (South Africa) FTA Finnish Transport Agency GIS Geographical Information Systems ITS Intelligent Traffic Systems LPI Logistics Performance Indicator METL Ministry of Equipment, Transport and Logistics (Morocco) MINVU Ministry of Housing and Urban Development MOLIT Ministry of Land, Infrastructure and Transport (South Korea) MOP Ministry of Public Works (Chile) MTT Ministry of Transport and Telecommunications (Chile) PFI Private Finance Initiative PPP Public-Private Partnership PSO Public Service Obligations RC Regional Council RUC Road User Charges SANRAL South African National Roads Agency Limited TOCs Train Operating Companies 5 Summary: How the transport sector is organized in case study countries CENTRAL MINISTRIES • Nearly all the countries have published a National Transport Strategy covering all modes • The specific ministry entities that form the of transport with both multi-modal initiatives peak government entities in transport differ as well as mode-specific components; because transport is often combined with other sectors (examples among the case study • Most countries have a unit or department in the countries include telecommunications, land, ministry responsible for freight logistics and in infrastructure, equipment, etc.); most cases this is responsible, along with other stakeholders, for producing a national logistics • The central transport ministries in each country strategy (in Morocco the ministry has sponsored have responsibility for national strategy, policy, a specialist Agency for the Development of and regulatory oversight of the sector on a Logistics Competitiveness); comprehensive multi-modal basis; • In three countries—Morocco, South Africa, and • In some cases, particular executive functions South Korea—the ministry’s responsibilities of government with regard to transport are organized administratively by mode and infrastructure provision, regulation or operations in two—Chile and Finland—by function. This are carried out by agencies associated with distinction is perhaps not as great as it seems or reporting to the ministry. For example, as those organized by mode have functional in Finland there is a single comprehensive departments within them, and those organized transport agency plus a corresponding transport by function have some mode-specific units in safety agency, and South Africa has a series of their internal organizations. specialist transport agencies and authorities, both under the authority of the Department of Transport; MINISTRY CHARACTERISTICS CHILE FINLAND MOROCCO S AFRICA S KOREA (MTT) (MOTC) (METL) (DOT) (MOLIT) National transport strategy Modes supervised by ministry (directly or via specialist agencies) Roads Rail Maritime Aviation Urban P.T. Logistics Organization features By By function By mode By mode By mode function Agency Agency model model National logistics strategy 6 PORTS • Ports (or groups of ports) are usually publicly owned and administered as “landlord” port • Ministries of Transport typically determine authorities with private sector terminals and national port development strategic planning other operations within the ports; and policy; • On balance there is a policy preference (not • National maritime authorities or agencies always possible or perfectly realized) for are charged with establishing and ensuring competition between terminals and ports. compliance with international maritime transport conventions and protocols, and policy and safety guidelines; SOUTH SOUTH FEATURES CHILE FINLAND MOROCCO AFRICA KOREA National Port Authority (Landlord Model) Regional/Local Port Authority (Landlord Model) Inter-Port or Inter-Terminal Competition Monopoly Terminal Operator Independent Port (Economic) Regulator Country Antitrust Authority over Port Matters Economic Regulation Assigned to Port Authority Price Regulation by Contract RAILWAYS or separate companies: rail freight is expected to operate commercially; • Ministries of Transport determine national railway policy and strategic planning of • Most railway passenger services require networks and are often the most important financial support, sometimes from a co-owned funder of railway infrastructure; freight operation and sometimes by direct government financial support. • Most railways are constituted as companies (whether owned publicly or privately); • Most national railways manage infrastructure and train operations in a vertically integrated way, even if the infrastructure is owned by another state institution; • There is a tendency to manage passenger and freight activities by different “lines of business” 7 VERTICALLY VERTICALLY SEPARATED OPERATORS CASE STUDY INTEGRATED COUNTRIES OPERATOR PASSENGER FREIGHT INFRASTRUCTURE Public, some FINLAND No Public Public private Freight only – SOUTH AFRICA Public - - public MOROCCO Yes – public - - - Operationally – SOUTH KOREA - - Infra authority public Passenger only – CHILE (SOUTH) - Private - public CHILE (NORTH) Yes – private - - - ROADS and local offices, sometimes with a high degree of autonomy; • Ministries with oversight of the transport/public works sector determine national roads policy • There has been a significant downsizing of road and strategic planning of networks. Ownership departments with the number of staff declining of the roads is vested in the public sector; from tens of thousands of personnel to a few thousand (Chile and South Korea) and in some • The road network is typically classified by instances just a few hundred (South Africa law into several administrative classes for and Finland). This has been achieved mainly the purpose of allocating responsibilities for by outsourcing maintenance work (and some management and funding, typically: client functions such as surveys and designs) to competitively selected private contractors; » Major trunk roads, including expressways and toll roads, are normally managed at the • Three of the five countries use earmarked national level by a government department taxes to fund road expenditures, but only one (as in Chile and Finland), and are often (Morocco) has a traditional Road Fund. Budget complemented by a semi-autonomous allocations remain the mainstay of capital public authority, or an autonomous development works. Chile and Finland impose corporation/company (as in Morocco, South heavy taxes on vehicles and fuel, but these are Africa, and South Korea); a part of general taxation; » Regional and rural roads are normally • A revenue base of flat fuel taxes and dependent managed at the sub-national level by on traffic levels can be eroded by economic state/provincial/local governments and slowdown, inflation, a switch to cleaner fuels urban roads by city governments or urban and vehicles, as well as by the increasing fuel councils; efficiency of conventional vehicles. There is a growing recognition in the more developed • While road organizations mainly operate as countries to shift from fuel taxation to road- government departments and agencies, an usage-based taxation. increasing number are being structured along commercial lines with greater functional and • All of the countries have utilized public-private financial autonomy; partnership (PPP) arrangements, with tolls, availability payments (shadow tolls), and/or • In bigger countries the road provision entities bond financing to fund parts of their network. are decentralized with construction and 8 maintenance implemented through regional • South Korea and Finland are global leaders in the application of Intelligent Traffic Systems (ITS) to their high-performance expressways, while other countries have introduced centralized traffic management systems on such facilities. CASE MINISTRY/ AUTHORITY/ REGIONAL SUB- ROAD PRIVATE STUDY AGENCY CORPORATION FOR ADMINISTRATIONS FUND ROAD COUNTRIES EXPRESSWAYS OR OFFICES OPERATORS AND/OR NATIONAL ROADS FINLAND Ministry of Transport (Finnish None Yes No Yes Transport Agency) SOUTH Ministry KOREA of Land, Korea Expressway Transport and Yes No Yes Corporation Infrastructure (Roads Bureau) CHILE Ministry of Coordination Public Works Directorate for Public Yes No Yes (Roads Works Concessions Directorate)1 SOUTH South African AFRICA Ministry of National Roads Yes No Yes Transport Agency Limited (SANRAL) MOROCCO Ministry of Equipment, Société Nationale des Transport and Autoroutes du Maroc Yes Yes Yes Logistics (ADM) (Roads Directorate)2 PUBLIC TRANSPORT • With few exceptions, the assignment of roles and responsibilities for addressing public • National government entities have a dominant transport is complicated with overlaps and role in establishing national public transport gaps in responsibility at different levels of policies, enacting legislation that affects public government; transport, and licensing vehicles; • Municipal governments or special metropolitan • National governments also play a very transport authorities are typically responsible significant role in funding public transport for service planning, the contracting and infrastructure and some provide operational management of transport operations, setting subsidies (sometimes channeled via sub- fares, and the provision of public transport national governments); infrastructure within their jurisdictions; 1 Two other ministries have a role in transport: Ministry of Transport and Telecommunications (policy and regulation) and the Ministry of Housing and Urban Development (urban roads and streets). 2 Separate directorate for Road Transport and Safety. 9 • Private bus operators are the principal providers • Inter-city bus services are mainly provided of public transport services in most of the urban by the private sector with either national or areas, though metropolitan authorities and regional government entities authorizing the municipal government sometimes do provide service, and providing subsidies where needed. services with their own bus companies; RESPONSIBILITY FOR URBAN RESPONSIBILITY FOR PUBLIC TRANSPORT TRANSPORT POLICY AND FUNDING OPERATIONS & INFRASTRUCTURE SINGLE MULTIPLE METROPOLITAN METROPOLITAN INDIVIDUAL NATIONAL NATIONAL NATIONAL TRANSPORT TRANSPORT MUNICIPAL GOVERNMENT COUNTRY MINISTRY MINISTRIES AUTHORITY AUTHORITIES GOVERNMENT MINISTRIES FINLAND CHILE MOROCCO SOUTH KOREA SOUTH AFRICA * An denotes a major role and an denotes a significant but subsidiary role. 10 I. The Case Studies The case study countries were selected for a History, geography, legal and political structure, combination of attributes: well-managed systems country size, and human and financial resources known to be effective and with elements all help shape the structure and management of recognized internationally as good practice. The the transport sector in different countries. No case studies map the institutional structures of one country experience has proven superior in their transport sector ministries and of individual the management of all transport modes: some transport sector modes (or sub-sectors). The countries have succeeded in the management countries represent a diverse group by geography of urban and public transport, others have better and demographics (Table 1.1). railways and port systems, and still others have excelled at building roads. TABLE 1.1 Case study countries: Population, income, and area PERCENT NATIONAL METROPOLITAN URBAN AS INCOME COUNTRY POP. LARGEST POPULATION OF COUNTRY DEFINED PER HEAD AREA (MILLION) CITY LARGEST CITY BY (USD1,000 (SQ. KM) (MILLION) COUNTRY PPP)3 CHILE 17.6 89.2 Santiago 6.3 $20.6 756,000 FINLAND 5.5 83.7 Helsinki 1.1 $36.4 338,000 MOROCCO 33.3 57.0 Casablanca 3.1 $5.5 447,000 SOUTH Johannes- 53.0 62.0 7.9 $11.9 1,221,000 AFRICA burg SOUTH 50.2 83.2 Seoul 9.8 (25.64) $34.8 100,000 KOREA 3 Adjusted for purchasing power parity. 4 Includes Seoul, Incheon, and Gyeonggi Province. 11 II. Governance WHAT IS GOVERNANCE? Most prior definitions of governance relate to prices); corporate forms of entities administering governance of states as a whole (state governance) the sector and delivering services; degree of or they deal with the detailed governance community participation in the oversight function; arrangements of individual enterprises (corporate and other dimensions. governance). This study focused on an area between these, that is, on the transport sector The evolution of transport sector governance (and its modal sub-sectors). It was necessary to in each country has taken place in a context of adopt a more specific definition. larger changes in public sector management as a whole beginning in 1980s. Some of the key trends The study interpreted public governance of the have been: privatization, e.g. sale of government transport sector as the legal framework and public business entities and the rise of contracting out; institutions by which public policy oversight of the competition, e.g. between different suppliers of transport sector is exercised and government roles transport services or between transport suppliers performed. It considered “good” governance as a bidding for exclusive public contracts; and means to transform national transport strategies devolution, with decisions on service delivery and policies into successful outcomes, meeting devolved from central department to localized or the citizens’ transport needs, and contributing arms-length service delivery entities (sometimes to the country’s long-term development goals. It referred to as “subsidiarity”). Over the past two shared the view (expressed by the United Nations decades, the transport sectors in many countries, Development Programme) that good governance including the case studies, have undergone should also be “participatory, transparent, and extensive organizational reforms, partly inspired accountable.” by the above trends. Recent experiences suggest some recentralization of higher-level governance The legal framework and public institutions of functions, especially in complex sectors with the transport sector can be constructed around a network implications and high public visibility such number of different policy alternatives: ownership as transport, but usually retaining clear separation of transport system assets (public or private); from the delivery side of transport services, and role of public and private sectors in transport often used by ministries of agency structures to infrastructure and services management; type administer executive functions such as day-to- and degree of economic regulation (i.e. of day regulation and public infrastructure provision. industry entry and exit, service specifications, and SIGNIFICANCE OF GOVERNANCE The success of any country’s transport system Governance is therefore increasingly recognized does not (and should not) depend primarily on as critical to the success of transportation sector governance, but instead on the competence authorities. In 2005, a team of experts from the and hard work of managers and employees in University of Toronto reviewed the factors that the transport industry who deliver transport contribute to best practice in urban transport infrastructure and services. Nevertheless, sector and concluded that the most critical requirement governance can have a significant influence is effective governance—even more important on how well any country’s transport industry than finance, infrastructure, and urban land-use responds to market demands and national policy planning. goals. Sector governance creates the enabling environment for the transport industry: the In its report on Transportation for effectiveness of the government bodies with Development, the World Bank asserts which it deals; the market freedoms that it is “transport performance is not just a matter permitted; the regulatory constraints under which of physical investment. Transport that it operates; the confidence with which it can plan contributes positively to development and 12 long-term business initiatives and investments. that is safe, clean, and affordable also depends on sector governance.”5 In the 2000 European Commission communication on transport, governance is considered a prerequisite to sustainable development of the sector. Irrespective of specific policies, the World Bank has identified a number of indicators that have been generally found to be consistent with good practice in discharging the governance function.6 These are shown in Table 2.1. In theory, principles of good governance apply universally. In practice, countries think and act differently. While the principles of effectiveness and integrity are equally valid everywhere, accountability practices often tend to differ. Countries often differ with respect to the balance between using the public sector versus the private sector to achieve their goals. Another area in which differences arise is in the involvement of communities and end users in decision-making. Variations in practice can be explained by the different histories, culture, and circumstances of each country. These variations are also affected by different systems and traditions for decision-making over policy, planning, and budgeting. These are intimately tied to the nature of government, the character of leaders and the political elite, and the main source of government revenues (taxes, natural resources, etc.).7 That being said, there is an opportunity to learn from what occurs internationally. The phrase “one size doesn’t fit all” should not be interpreted as encouragement to claim national uniqueness as justification for ignoring practices that have proven effective. 5 World Bank (2008) Safe, Clean and Affordable: Transport for Development available at siteresources. worldbank.org/INTTRANSPORT/.../Transport 6 SSATP (2013), Transport Governance Indicators for Sub-Saharan Africa 7 The IDL group, Assessing Governance in the Transport Sector, Working Paper No 2. 13 TABLE 2.1 Good practice governance indicators GOVERNANCE INDICATOR RATIONALE DIMENSION INSTITUTIONAL Clarity of and distinction between Institutional reform and separation lie at the heart of MANDATES AND mandates and responsibilities of transport sector performance. A clear description of the RESPONSIBILITIES key ministries, departments, and responsibilities of key ministries, departments or agencies agencies in the transport sector provides transparency, clarity for leaders, a focus for delivery, a basis to resist external interference, and a clear locus of accountability. STRATEGIC Coherence of transport sector Transport sector policy must be aligned with the PRIORITIES policy and extent to which its macroeconomic context in order to contribute to high- prioritization process is objective level national objectives. A consultative and needs-based approach is a fundamental basis for political and public sector accountability. BUDGET Budget allocations based on Good progress on outcomes at the sector level is achieved DISCIPLINE reliable financial forecasts and where links exist between planning, prioritization, and aligned to priorities realistic budgeting. Much depends on the government’s ability to agree with ministries’, departments’, and agencies’ ceilings and resource envelopes based on reliable financial forecasts. PROGRAM DESIGN Quality and use of performance An effective and accountable public sector requires and value for money indicators clarity on objectives to align and justify the activities of ministries, departments, and agencies to improve service and program delivery. Key Performance Indicators (KPIs) need to be expressed simply, clearly, and precisely for transparency, resource allocation, and accountability. PROCUREMENT Comprehensive and timely public Greater disclosure of procurement and project information disclosure of transport sector can yield benefits to government, industry, and citizens. procurement plans Transparency reduces the risk of corruption by increasing the risk of being detected. DELIVERY Comprehensive time/cost reports Periodic progress reports are necessary to detect early on progress for major transport signs of project delays, overruns, and incompleteness. projects, disclosed to the public in a timely and accessible manner SUSTAINABILITY Each transport sector agency A professionally competent maintenance agency is needed has benchmarks for routine and to safeguard quality transport. periodic maintenance of assets and allocates budget accordingly. INFORMATION Transparency and timeliness of Disclosure of financial information to the public is DISSEMINATION annual budget and expenditure considered central to good governance, transparency, and disclosures accountability. Secrecy and lack of accountability can open the door to corruption whereas transparency can create checks and balances. EXTERNAL Rules applied to the membership Boards play a vital role in ensuring effective and efficient SCRUTINY and appointment process for provision of services. Boards need proper procedures and key transport sector governance policies to operate effectively. boards ACCOUNTABILITY Percentage of recommendations Independent audits play a fundamental role in ensuring from independent technical that organizations function according to good governance, and financial auditor reports accounting, and auditing standards, as well as adopt implemented within one year appropriate risk management arrangements. 14 STATE REGULATION State regulation as interpreted in the study administered and enforced by the ministries and is part of governance, but not the whole part. administrative agencies (that is, the executive or Unfortunately, the term regulation is sometimes administrative branch of government). used interchangeably with the concept of governance, as in the general statement that In relation to transport, the most important “the job of a Transport Ministry is to regulate forms of regulation can be classified into four the transport sector.” Such usage is too types: economic regulations (which may include general for the current purposes. The concept conditions that must be fulfilled by companies of regulation has its origins in the notion of or individuals to participate in the industry or controlling according to rules (Latin regula). activity, pricing rules or restrictions that apply or In this study the words transport regulation must be applied by participants, access to public refer specifically to the administration of the subsidies etc.); safety and security regulations rules with which would-be participants in (typically aimed at ensuring the safety and/or transport activity (suppliers and users) must security of the activity for users, employees, and legally comply. Other important subjects for the community at large); technical regulations the exercise of public governance, such as (typically key aspects of technical design and transport network development strategy, standards that are judged to have wider public allocation of public resources, infrastructure interest consequences, such as interoperability financing, international agreements, community across a network); and social and environmental consultation etc., may all affect and influence regulation (usually aimed at mitigating certain the participants in the industry but are not negative external8 impacts of transport activity themselves included in the specific usage of such as community resettlement, noise, visual regulation adopted in the study. intrusion, emissions, greenhouse gases etc.). While the classification is useful, there are inevitably In most countries, legislative bodies enact some overlaps in specific regulations that may laws submitted by governments in support of be designed to influence more than one of these their policies. Such laws can include detailed areas. regulations but often an entity empowered under that law, typically a ministry or other The main forms of regulation of interest to executive entity of government, then drafts the the study were the governments’ economic regulations that implement the authority of the regulation of transport, safety regulation laws. Regulations (as well as executive orders (including road safety), and technical regulation and proclamations) are ancillary or subordinate (of matters such as highway and port design to laws, but both laws and regulations are standards). Social and environmental enforceable. Most countries have a set of official regulations usually emanate from government current codified laws and a set of all official ministries and bodies outside the transport regulations. However, in many countries the list sector and are applicable across sectors. More of regulations is very long and can sometimes be detailed regulatory policy analysis in transport, incomplete and outdated. with practical examples from different countries, can be found elsewhere (Estache So regulations are the means of implementing and de Rus 2000 9; Estache and Serebrisky laws and can be adapted and updated to the 2004 10; Kessides 200411) extent permitted by the enabling law, without legislative amendment. Enforcement of laws is usually rather different from that of regulations. Laws are administered and enforced by a state’s legal system (that is, the judicial branch of government), whereas regulations are often 8 Negative externalities are the costs imposed on those who did not choose to incur the cost. 9 Estache, A. and G. de Rus, eds. 2000. Privatization and Regulation of Transport Infrastructure: Guidelines for Policymakers and Regulators. WBI Development Studies. World Bank, Washington DC. 10 Estache, A. and T. Serebrisky. 2004. Where Do We Stand on Transport Infrastructure Deregulation and Public-Private Partnerships. Infrastructure Vice Presidency, World Bank, Washington, DC. 11 Kessides I.N. 2004. Reforming Infrastructure: Privatization, Regulation and Competition. Policy Research Report. World Bank, Washington, DC. 15 STRUCTURE OF PAPER The remainder of the paper describes how transport sub-sectors are organized in the five case study countries dealing respectively with: the peak governance entity, typically a Ministry of Transport or equivalent (Section 3) and the central functions of regulatory administration; ports (Section 4); railways (Section 5); roads (Section 6); and public transport (Section 7). It gives particular attention to structural, institutional, and financing dimensions. The main lessons learned from this collective experience are summarized in Section 8. 16 III. Transport Governance at the Ministry Level Each of the case study countries has a different material, and World Bank country sources. In ministry structure at the apex of governance of some cases the ministries are responsible for the transport sector. This section provides an governance in other sectors but the descriptions overview of those ministries assembled from concentrate on transport roles. material on their websites, other publicly available CHILE The Ministry of Transport and Telecommunications infrastructure and public buildings such as jails, (MTT) is responsible for strategic planning, hospitals, and schools. MOP has a relatively small policy formulation, and regulation for all modes workforce. It contracts out civil works to the of transport in Chile. It describes its main private sector. Private contractors undertake all mission as developing national policies for new works and most maintenance. telecommunications and transport, supervising public and private sector companies operating MOP has two General Directorates—Public Works in the country, and coordinating and promoting and Water Resources. The General Directorate the development of such activities while of Public Works has the following executive monitoring the obligation to respect the directorates: coordination of concessions, airports, relevant legislation, rules, and standards. The ports, roads, irrigation structures, and architectural ministry is comprised of the country’s transport services. MOP has a territorially decentralized department, telecommunications department, organizational structure with regional directorates and civil aeronautical board. In addition, it serves and provincial offices. MOP has an establishment as a liaison between the government and various of 8,700 personnel. companies, including 10 port companies created from decentralization of Chile’s national port The authority for establishing overall transport authority. safety policy, standards, and regulations is vested in the Ministry of Transport and The Ministry of Public Works (MOP) undertakes Telecommunications (MTT). The national police road planning and is in charge of all transport are responsible for the enforcement of laws and infrastructures except urban streets. The Ministry regulations with respect to traffic regulations. The of Housing and Urban Development (MINVU) MOP is responsible for ensuring that road designs has responsibility for the urban street network and axle load regulations on the national network nationwide, except for the city of Santiago. conform to national road safety standards, and for MOP’s responsibilities cover a wide span of public installing various road safety features, e.g., signs, infrastructure, including inter-urban highways, barriers, and overheads. Likewise, the MINVU is rural and urban roads, bridges, ferry landings, responsible for ensuring that the design of urban ports, and airports, besides water resources streets conforms to road safety standards. FINLAND The Ministry of Transport and Communications these targets are achieved and how budget (MoTC) is responsible for policy and regulation of appropriations are used. It prepares spending the transport systems and networks, transport limits, an annual budget proposal, and an operating of people and goods, traffic safety, and transport and financial plan. The ministry also monitors the issues relating to climate and the environment. use of funds allocated to the transport sector in The main responsibilities include providing the state budget and describes their use in its strategic performance guidance and supervision annual report. The MoTC prepares acts, decrees, of operation of its agencies through setting and decisions that are made in Parliament, at annual performance targets and monitoring how presidential sessions of the government, and 17 in the government itself. The ministry also maintenance all over the country; issues ministerial decisions and regulations • Implement vital road projects and to plan, as well as guidelines and instructions on their design, maintain, and construct railways and implementation. waterways; • Direct the road maintenance operations of the The Finnish Transport Agency (FTA) is an regional centers for economic development, executive agency under the jurisdiction of transport, and the environment; MoTC responsible for the use, maintenance, and • Participate in reconciling traffic and land use; development of the nationwide transport system, • Control and develop traffic management in including roads, railways, and waterways. The the government’s traffic lanes and in the agency is located in the capital Helsinki and has waterways; overall charge of the management of all modes of • Ensure winter navigation; transport it operates under the oversight of the • Develop and promote transport services and MoTC. This work is carried out in cooperation with the functioning of the markets for them; the regions and municipalities. FTA is organized by • Improve the performance of transport core functional areas each covering all subsectors infrastructure management; of transport. These are: Operations Management • Develop the operational preconditions for (including planning, finance, legal, and HR), public transport and grant maritime subsidies Projects, Infrastructure Management, and Traffic and subsidies for the other transport modes; and Information (with a special focus on region- • Update and develop hydrography; wide traffic management centers). The FTA is also • Ensure that the transport system functions responsible for all aspects of implementation of under abnormal and exceptional situations. large and technical complex projects such as road improvements using public-private partnership Finland comprises 19 regions governed by (PPP), project alliances, and design-build-finance- Regional Councils (RCs) under the jurisdiction of operate type of schemes. the Ministry of Employment and the Economy. The population of the regions does not directly elect The MoTC sets annual targets for the FTA, these RCs’ representatives. Instead some elected including ones related to the service standard officials of the municipalities are seconded to and condition of transport infrastructure, safety, the respective RC. Of the 19 regions, 15 have and environmental protection. The FTA submits Centers for Economic Development, Transport biannual reports to MoTC detailing the use of and the Environment (ELY centers) responsible funds and the achievement of targets. FTA lists for the government’s regional development its responsibilities as: and implementation-related tasks of all sectors. The regional development and implementation- • Maintain and develop the traffic system jointly related duties also include road maintenance, road with the other actors in the field; development projects, transport permits, traffic • Maintain the government’s road and rail safety, public transport, and ferry operations. networks as well as the waterways under The condition and development of railways and its control, consolidate measures directed at waterways on the other hand are the responsibility them, and directing and supervising waterways of the FTA centrally.12 MOROCCO The Ministry of Equipment, Transport and various modes of transport, economic efficiency, Logistics (METL) is the peak governance body and improving the quality of service. for the transport sector in Morocco. METL claims significant progress in the development of METL is organized in directorates for modes/ transport infrastructure for which it is responsible, functions: Civil Aviation, Ports/Maritime including roads, highways, railways, airports, and Transport, Road Transport and Road Safety, and ports. Public Roads. As its name implies METL is also the peak governance institution for development and As transport sector regulator, METL it is also improvement of freight logistics in Morocco and concerned with transport market reforms, has developed and is implementing a national including introduction of competition in the logistics strategy, including establishment of 18 12 More information on the FTA can be found at http://portal.liikennevirasto.fi/sivu/www/e/fta the Moroccan Agency for the Development of • Promotion of intermodal transport; Logistics competitiveness (AMDL). • Increasing the supply and quality of transport services. The department adopted a new strategy for 2012- 2016, taking into account government guidelines for: Among its current areas of strategic interest METL lists institutional and regulatory reform, • Increased competitiveness of the national and basic infrastructure, transport safety and security, regional economy; economic activities within the sector, construction • Integrated and harmonious development; and public works, and financing and PPP. • A balanced transport infrastructure; • An aggressive investment policy with The National Transport Board (ONT), an agency of complementary modes of transport; METL, regulates road freight services. SOUTH AFRICA The Department of Transport (DoT) is the key South Africa has adopted an agency model for ministry for transport strategy, policy and the main executive functions of the ministry in regulation, as well as standards, procedures, and the transport sector and 12 separate entities financing of all transport modes in South Africa. report to the ministry (some authorities and some The structure of the DoT (equivalent to a ministry) executive agencies of the ministry). They include: is based on two core functions (transport planning and transport information) plus five transport • South African Civil Aviation Authority modes (rail transport, road transport, civil aviation, • Cross-Border Road Transport Agency maritime transport, and public transport). • South African Maritime Safety Authority • Railway Safety Regulator In 2013, there were 773 authorized staff • Air Traffic and Navigation Services positions in the department. The department’s • Road Accident Fund stated mission is “to lead the development of • Airports Company South Africa efficient integrated transport systems by creating • Road Traffic Infringement Agency a framework of sustainable policies and regulators • Road Traffic Management Corporation and implementable models to support government • Ports Regulator of South Africa strategies for economic, social and international • South African National Roads Agency Limited development.” The main roles of the DoT and its (SANRAL) public entities in relation to the transport sector • Passenger Rail Agency of South Africa (PRASA) are listed as: Responsibility for transport is constitutionally • Policy and strategy formulation in all functional divided between DoT and the nine provincial areas; transport departments. DoT has exclusive • Substantive regulation in functional areas responsibility for national and international where DoT has legislative competence; airports, national roads, railways, and marine • Implementation in functional areas where DoT transport. The national and provincial departments has legislative competence; share responsibility for other airports, public • Leadership, coordination, and liaison in all transport, road traffic regulation, and vehicle functional areas; licensing. The provincial departments have • Capacity building in all functional areas; exclusive responsibility for provincial and local • Monitoring and evaluation and oversight in all roads, traffic, and parking. functional areas; and • Stimulate investment and development across all modes. SOUTH KOREA The Ministry of Land, Infrastructure and Transport for aviation in South Korea. Established in 1948, it (MOLIT) has the overall policy, regulatory, and has been reorganized several times in the past two funding mandate for all land transport modes and decades as the economy has expanded and the 19 role of the public sector has evolved. The ministry for the administration, planning, construction, and was originally the Ministry of Transport, then maintenance of public roads and also supervises the Ministry of Construction and Transportation, the Korea Expressway Corporation. It serves as then the Ministry of Land, Transport and Maritime the central road agency of the government, where Affairs. The latest reorganization in 2013 all policies related to public roads are formulated resulted in the Ministry of Land, Infrastructure and and all plans by various road agencies are Transport and excluded maritime affairs. reviewed and approved. The provincial and local governments are responsible for management MOLIT describes its mandate as covering of their respective road networks under MOLIT’s future-oriented territorial development, safe supervision. and convenient infrastructure, and transport development. It is staffed by 956 officials.13 MOLIT also has overall responsibility for transport MOLIT’s organizational structure (under a Cabinet safety (other than maritime safety) and in the minister) has two main functional streams: (a) land roads sector shares road safety responsibility with and infrastructure and (b) transport, each headed the Ministry of Public Administration and Security by a vice minister. The transport stream has and the National Police Agency. As an extension four branches—a Transport and Logistics Office of its transport regulatory responsibilities, (which includes transport policy, regulation, and MOLIT also regulates most aspects of transport coordination functions, as well as urban and public concessions under the Private Participation in transport), Civil Aviation Office, Road Bureau, and Infrastructure Act. Railway Bureau. The Road Bureau is responsible COMMON THEMES There are many differences in the specific Most countries have a unit or department in the ministry entities that form the peak government ministry that is responsible for freight logistics. entities in transport in the five countries, but In most cases, this is responsible, with other also some common patterns as indicated in stakeholders, for producing a national logistics Figure 3.1. strategy [in Morocco the ministry has sponsored a specialist Agency for the Development of The central transport ministries in each country Logistics Competitiveness (AMDL)]. have, with few exceptions, national strategy, policy, and regulatory oversight of the sector Figure 3.2 summarizes (with some simplification) on a multi-modal basis. All the countries use a the responsibilities for administering economic mission statement and four have published a and safety regulation in each country, recognizing National Transport Strategy covering all modes of that the central ministry itself is responsible for transport containing both multi-modal initiatives establishing the high-level regulatory policies as well as mode-specific components. that shape the regulatory function. In some cases particular executive functions with regard to infrastructure provision, regulation or operations are carried out by agencies reporting to the ministry, especially in Finland (where there is a single comprehensive transport agency) and South Africa (which has a series of specialist transport agencies). In three countries the ministry’s responsibilities are organized administratively by mode and in two by function, though the distinction is perhaps not as great as it seems as those organized by mode have functional departments within them, and those by function have some mode-specific units in their internal organizations. 20 13 For more information see http://english.mltm.go.kr/USR/WPGE0201/m_28276/LST.jsp TABLE 3.1 Common features of ministry governance in case study countries CHARACTERISTICS CHILE FINLAND MOROCCO S AFRICA S KOREA MINISTRY ACRONYM MTT MoTC METL DOT MOLIT MISSION STATEMENT NATIONAL TRANSPORT STRATEGY Modes supervised by ministry (directly or via specialist agencies) Roads Rail Maritime Aviation Urban P.T. Logistics ORGANIZATION by by function by mode by mode by mode FEATURES function14 agency model agency model NATIONAL LOGISTICS STRATEGY TABLE 3.2 Structure of the administration of regulations in case study countries FUNCTION CHILE FINLAND MOROCCO S AFRICA S KOREA ECONOMIC MTT MoTC and METL and A number of MOLIT REGULATION Finnish National mode-specific Transport Transport agencies Agency (a multi- Board (a multi- with wide modal agency of modal agency regulatory MoTC) of METL) powers reporting to SAFETY MTT Finnish DOT MOLIT (other REGULATION Ministry of Public Transport than maritime) Works (MOP) Safety Agency Ministry Ministry of (multi-modal) of Public Housing Administration and Urban and Security Development National Police Chilean Police Agency Chile’s Ministry of Public Works (MOP) undertakes road planning and is in charge of all transport infrastructure 14 except urban streets. 21 IV. Ports BACKGROUND The world’s port industry has experienced a are then contracted or concessioned to the number of institutional transitions in the past few private sector. Today, 90 of the world’s top 100 decades. Port sector institutional frameworks container ports are administered in this way were changed to isolate port administrations to achieve a balance between private sector from undue political and bureaucratic influences. operational efficiency and the public interest But eventually these quasi-independent port in port performance. While the landlord model authorities (often monopolies) became the is not a panacea, the combined strategy of bureaucratic creatures they had hoped to privatization of terminal operations, institutional avoid15, generally resulting in higher labor costs, reform, and a rationalized regulatory framework lack of investment, and less-than-acceptable can pave the way for improved efficiency and performance. These conditions ushered in a productivity. wave of port privatization in the 1980s, with the United Kingdom establishing a precedent The landlord model is implemented in different for other countries to follow. Latin America, ways. Some countries have relegated the encouraged by the United Kingdom and the later entire responsibility for port master planning, experience in Malaysia, ushered in the ports administration, tariff setting, financing, and privatization wave of the 1990s, with Argentina, operational regulation to local or regional port Chile, Colombia, and Panama all restructuring authorities, while economic regulation resides their port sectors, adopting the landlord model with antitrust enforcement entities (e.g. the of port administration and engaging the private United States and Chile). Other countries have sector to invest in port modernization and allocated these responsibilities to a range of provide port services. entities, such as national port planning and operational regulation assigned to ministerial Though there are variations of the landlord units (e.g. Colombia), port administration and model itself, the World Bank and the Asian operational regulation to local or regional Development Bank have promoted the landlord bodies (e.g. Indonesia), and economic regulation model as a global best practice due to its to transport regulators (e.g. Colombia and favorable impact on port performance. It is now Peru). Still others have assigned these primary the most prevalent form of port administration.16 responsibilities to national port authorities (e.g. In landlord ports the public sector is the owner Liberia, Morocco, Nicaragua, Saudi Arabia and and developer of the basic port infrastructure South Africa), while economic regulation may and manager of the common areas and facilities. reside with an independent port regulator (e.g. The cargo handling operations (and sometimes South Africa and Nigeria17). other activities such as pilotage, towage etc.) 15 In 1988, for example, Argentina’s port sector alone involved six ministries and 18 state agencies; see Economic Commission for Latin America and the Caribbean, The Restructuring of Public Sector Enterprises: The Case of Latin American and Caribbean Ports, LC/G, 1691-P, Santiago, Chile, 1992, p. 25, citing Bolsa de Comercio de Buenos Aires, Jornades sobre puertos Argentines: problemática y soluciones, Buenos Aires, August 1989. 16 See World Bank, Port Reform Toolkit, “Module 3: Alternative Port Management Structures and Ownership Models”, Washington, D.C., 2003, p. 18. The Asian Development Bank states the following: “The best institutional structure for promoting private sector involvement in public port operations and investment is the landlord port,” and that “the landlord model is the best structure for promoting PSP (private sector participation) because it accommodates different forms of public-private partnership,” and “Best Practice supports a policy of promoting the development of private cargo-handling terminals and allowing them to compete for third-party cargo.” See Asian Development Bank, Developing Best Practices for Promoting Private Sector Investment in Infrastructure—Ports, Manila, Philippines, 2000, pp. ix, 15, and 62, respectively. 17 Note that the government of Nigeria recently appointed the Nigerian Shippers’ Council as the Ports Economic Regulator. This apparently is intended as a temporary measure until the National Transportation Commission 22 law is passed by the National Assembly. ORGANIZATION AND MANAGEMENT OF PORTS Table 4.1 describes the port institutional Two goals of global port reform were to introduce arrangements in the five case study countries. private sector provision of port services and They have all evolved to the landlord model, encourage port competition. Only one of the case either through a national port authority (South study countries failed to achieve these goals. Africa and Morocco) or a regional or local port South Africa corporatized its port operations authority (Chile, Finland, and South Korea). organization and granted it a monopoly position Generally, the role of the Ministry of Transport in all of the country’s ports. All of the other (or local equivalent) is to engage in national countries have succeeded in creating competitive port development policy and strategic planning environments (inter-port or inter-terminal and coordination with national road and railway competition), with Morocco eliminating the (and sometimes inland waterway) planning. monopoly position of its national port operating National or regional local port authorities conduct company: the company competes with private local port master planning, issue and enforce sector operators in several ports and there are operational regulations, maintain navigation plans to eventually privatize the company. channels, breakwaters, and common use facilities, and grant licenses, concessions, and leases for Prior to transfer of port administration port operations and port services. National and responsibility to local authorities, South Korea regional or local port authorities generally do envisioned the need to focus on container terminal not have a role in commitments established development as part of its effort to promote port by international maritime protocols; this latter sector competitiveness. It established a national responsibility tends to be assigned to a national container terminal development authority maritime authority charged with establishing and within the Ministry of Transport charged with ensuring compliance with maritime transport and the promotion and development of container policy and safety guidelines. terminals. While this entity continues to exist, TABLE 4.1 Institutional profiles of ports in case study countries SOUTH SOUTH FEATURES CHILE FINLAND MOROCCO AFRICA KOREA NATIONAL PORT AUTHORITY (LANDLORD MODEL) REGIONAL/LOCAL PORT AUTHORITY (LANDLORD MODEL) INTER-PORT OR INTER- TERMINAL COMPETITION MONOPOLY TERMINAL OPERATOR INDEPENDENT PORT (ECONOMIC) REGULATOR COUNTRY ANTITRUST AUTHORITY OVER PORT MATTERS ECONOMIC REGULATION ASSIGNED TO PORT AUTHORITY PRICE REGULATION BY CONTRACT 23 it no longer has jurisdiction over the country’s port regulatory policies should ideally apply three largest ports. Today its role is limited to equally to all ports and so create a level playing the development of container terminals in the field for competition. country’s smaller ports and assessing the merits of developing new container terminals outside the Finland is also unique in that national port jurisdictions of the three main port authorities. administration has devolved to municipal government control, with city councilmen serving Morocco has established a dichotomous port on the boards of the port administrations. Finland administrative framework. Its national port has had some difficulties with this arrangement authority has no jurisdiction in Tangier’s Trans- partly because effectiveness of municipal political Med port complex, where another port authority leadership has fallen short of expectations. also exists. This has created a situation where Accordingly, efforts are underway to corporatize ports operate and can potentially compete in port administrations, as favored by the European offering different regulatory requirements, which Union. has the potential to distort competition. National FINANCING OF THE PORT SECTOR Very few countries now rely on central government the port, such as road or rail traffic routes and port funding for port development other than in some main gates. Terminal operators or concessionaires cases for entirely new ports, where a review of cover the cost of port development, operations, legislation suggests that funding support can and maintenance, though local port authorities come from central government capital budgets. in Finland provide port infrastructure and then This would probably be limited to development of lease it to terminal operators, who provide their accesses and protection works while the private own equipment (and may also invest in port sector would cover the cost of port construction. improvements). In South Korea, as earlier noted, the container terminal development authority Generally, national or local port authorities, as may invest in port development in areas outside landlord administrators, assure the provision and the control of local port authorities. Table 4.2 maintenance of navigation accesses, including identifies the main funding sources for port breakwaters, navigation channel, and turning administration, development, operations, and basins, as well as common-use or access areas in maintenance. TABLE 4.2 Port revenue sources for case study countries REVENUE SOURCES CHILE SOUTH MOROCCO FINLAND SOUTH AFRICA KOREA LINE AGENCY OPERATING OR CAPITAL BUDGET National or local port authority dues ACCESS CHANNEL/TURNING BASIN TERMINAL DEVELOPMENT * BREAKWATER MAINTENANCE LANDLORD ADMINISTRATION Terminal operator/concessionaire charges TERMINAL DEVELOPMENT TERMINAL OPERATIONS TERMINAL MAINTENANCE 24 * For non-local port authority ports only PORT CONCESSIONS All of the countries have awarded private In awarding concessions, most of the countries concessions with the exception of South Africa, have avoided creating an environment that would though that port authority has the authority to allow operators to dominate the container trades. concession terminals to private sector operators. Chile, for example, did not permit operators Chile has now awarded four concessions to to hold more than one concession in the ports operators serving the same primary hinterland of Valparaiso and San Antonio. Nor are they market of the country’s capital of Santiago. The permitted to eventually purchase more than 25 result is a fiercely competitive market where percent equity interest in any other concession in operators today offer handling rates at 65 Chile. In contrast, Finland has allowed mergers to percent of the maximum rate allowed in their occur to the extent that the same operator is now concession contracts. Concessions or leases have operating in two different ports that potentially been awarded in the main ports to the extent compete for the same Helsinki trades. This that inter-terminal and in some cases inter-port perhaps may be mitigated by the existence of competition prevails. As earlier noted, South other operators in these ports, but there remains Africa has a state-owned monopoly operator in the potential in Finland for additional mergers or its main ports. acquisitions that would have the effect of creating dominance over certain markets. ECONOMIC REGULATION Just as South Africa is the only case study country Morocco does have a national antitrust authority to preserve the national port operator monopoly in place that appears to have the authority to position, it is also the only one to have established intervene in port sector antitrust matters, though an independent port regulator.18 The role of this it appears it has no jurisdiction over antitrust regulator is to review, monitor, and approve port practices in the Tanger-Med region. All of the case dues and tariffs imposed by the national port study countries appear to have jurisdiction over authority. Oddly, the independent port regulator port sector antitrust matters (with the possible has no authority to review, monitor, and approve exception of the South African antitrust authority) tariffs of the monopoly port operator, which itself and to intervene in state-owned enterprise is a state-owned corporation under a shareholder practices. Two of the countries, including Chile ministry that sets financial targets for state- and Morocco, have inserted price caps within the owned enterprises. provisions of concession contracts (known as the regulation by contract approach), but these do not Morocco has the only port authority that has necessarily restrain operators from engaging in economic regulation authority. However, it does market or pricing collusion, though the existence not appear currently to be well equipped to of four rival operators would discourage such effectively execute this responsibility. That said, practices. PERFORMANCE OF THE PORTS SECTOR None of the case studies should necessarily be higher the moves per crane serving the vessel, considered as “best practice” cases though there the sooner the vessel may depart to its next port are elements in most countries that reflect good of call and hence reduce the cost of down-time. practice. Table 4.3 provides a comparison of port Asset utilization effectiveness encompasses the performance. Indicators relate to the productivity container volume (reported in TEUs) moved per and the effectiveness of port asset utilization linear berth meter (reported in TEUs per berth in the main gateway port for each country. meter) and the number of containers handled Productivity is the number of container moves per square meter of the terminal area (TEUs per per crane reported as TEUs per gantry crane. The hectare). The higher the number of moves, the 18 Efforts are underway in South Africa to establish a national transport regulator where the independent port regulator responsibilities may eventually reside. 25 more productive the asset under the terminal There are some explanatory factors that affect the operator’s control. reported performances in Table 4.3. For example, higher crane productivity tends to be associated The Logistics Performance Indicator (LPI)19 shown with handling larger vessel sizes, the relative in Table 4.3 ranks 160 countries on the basis of composition of 20-foot and 40-foot containers, scores addressing performance related to customs the type of trade (transshipment versus domestic), clearance, infrastructure, international shipments, and land constraints. The larger the vessel, the logistics competence, tracking and tracing of freight, more cranes are likely to be deployed to serve and timeliness of shipments. While the LPI does not that vessel. The higher the transshipment volume address ports per se, ports are in the infrastructure the lower the crane cycle time required for each category and to some degree affect the other container loaded or discharged. And the higher activities associated with the transport logistics the volumes, the greater the likelihood that higher chain, of which ports serve as the anchor asset. density storage is used to serve the trades. TABLE 4.3 Comparative port performance of gateway port terminals INDICATORS CHILE SOUTH MOROCCO FINLAND SOUTH (VALPARAISO) AFRICA (TANGER- (HELSINKI) KOREA (DURBAN) MED) (BUSAN) DATA FOR PORT INDICATORS 2011 container volume (TEUs)2 928,432 2,698,656 2,185,000 322,445 16,184,706 Number of gantry cranes3 6 25 8 13 63 Length of berths (in meters)2 1,207 1,299 2,731 107 2,033 Hectares2 31 180 40 77 357 PORT INDICATORS TEUs per gantry crane 154,739 107,946 273,125 24,803 256,900 World average4 124,674 124,674 124,674 124,674 124,674 Comparison to world average 124% 87% 219% 20% 206% TEUs per berth meter 1,207 1,299 2,731 107 2,033 World average4 1,075 1,075 1,075 1,075 1,075 Comparison to world average 112% 121% 254% 10% 189% TEUs per hectare 29,949 14,993 54,625 4,204 45,328 World average4 27,624 27,624 27,624 27,624 27,624 Comparison to world average 108% 54% 198% 15% 165% Average of all three indicators 115% 87% 224% 15% 186% relative to world average LOGISTICS PERFORMANCE 42 34 50 24 21 INDICATOR (LPI) RANK5 1 Except for the LPI, indicators are presented for container terminals in each of the country’s gateway ports, as follows: San Antonio (San Antonio Terminal International), Durban (Transnet Port Terminals Piers 1 and 2), Tanger-Med (APMT), Helsinki (3 terminals—Finnsteve Oy, Multi-Link, and Steveco Oy), and Busan (Busan International Container Terminal, Hanjin Gamcheon Container Terminal, Hutchison Gamman Container Terminal, Jasungdae Container Terminal, Korea Express Busan Container Terminal, Korea Express Gamman Container Terminal, and Pusan New Port Terminal). 2 Source: Containerization International (2012). 3 Source: Containerization International (2012), individual websites for port authorities and terminal operators and calls with terminal operators. 4 Source: Drewry (2012). 5 World Bank (2014); LPI rank for Morocco comes from World Bank (2012) as Morocco’s ranking is not reported in World Bank (2014). Reported in the World Bank’s Connecting to Compete 2014—Trade Logistics in the Global Economy, The 19 26 Logistics Performance Index and Its Indicators Tanger-Med and Busan serve larger vessels than the other three ports. The lower performance of Helsinki reflects lower overall cargo volumes and relatively more land, crane, and berth availability than is actually required for the current volumes. Durban also performs lower than world averages for TEUs per gantry crane and TEUs per hectare, suggesting slower moves per crane hour or an excessive number of cranes as well as either excessive land or lower density storage. Lower density storage means the cycle time for movement to storage is also likely to be higher as the yard equipment has to move farther from the cranes at the berth. A more detailed analysis with a larger sample of ports would be required to draw firm conclusions about the relationship of port performance to each country’s port institutional framework. However, given the countries under study here, generally those ports that have private sector participation, competition (e.g. Valparaiso, Tanger-Med, and Busan), and greater commercial autonomy at arms length from political influences seem to perform better than those ports that do not reflect these characteristics. As earlier noted, a corporatized state-owned monopoly operator serves South Africa’s ports, while Finland’s gateway port of Helsinki is subject to municipal governance. As shown in Table 4.3, these two ports perform well below world averages as indicated by the average scores of the three indicators compared to the world indicators. 27 V. Railways BACKGROUND In the 19th and early 20th centuries, the advent or more operators who are either publicly- or of railways represented a quantum improvement privately owned. over most forms of land transport. With that market power, railways rapidly developed around Historically, public railway services in many the world regardless of the type of governance countries20 were effectively delivered by a or method of management. Most government government ministry or department, which intervention was designed to control the monopoly combined policy-making, regulation, and service power of railways, either through direct ownership delivery in a single body. Others were constituted or through regulation of prices and services. as state enterprises, generally created by statute. Some statutory authorities have governance In due course, motorized road freight and road structures that resemble a company in the form and airline passenger transport eroded the of a board and management that are (often) market power and dominance of railways. In independent from day-to-day intervention by many cases the railway industry and government the government. Nevertheless, governments policies for railways were slow to adapt to the generally set down a robust framework to publicly new competitive environment. Competition from steer the strategic direction of such authorities. other modes, especially from road transport, Some still remain, but in many countries, railway led to significant diversion of passengers and departments or authorities have been converted freight. In some countries this was exacerbated into public corporations.21 Public corporations are by transformation in industrial structure, which usually adopted to allow clearer specification of reduced or eliminated the bulk freight from which government requirements in terms of service many railways used to support other traffic. Many delivery and financial performance, while national networks now receive various forms of reducing direct political interference in day-to-day financial support from governments to provide operational and staffing matters.22 their services. The means by which railway services are delivered The varying impact of market changes, as well as varies widely from country to country. Some government and industry responses to them, has countries have a single operator while others have led to a wide range of institutional arrangements several; some have separate passenger and freight around the world. Three varying characteristics of operators, while others also have infrastructure these arrangements are: companies; some have private companies and some remain all publicly-owned. However, the • the level of transport policy integration, i.e. the overall trend has been towards less concentration extent to which there is integrated transport and more diversity in entities supplying rail governance in a unitary ministry; services. The main structural variants having this • whether or not railway sector policy-making is tendency are discussed below. separated from transport services delivery; • the means by which services are delivered; Horizontal and vertical separation this can be through markets that are either Until recently, most countries, other than in North regulated or deregulated and through one America and parts of South America,23 had a single 20 Here we are excluding countries whose national railway systems have been historically dominated by private railway companies such as in the United States. In some other countries, e.g. the United Kingdom, China, and India, private railways were subsequently combined into a national publicly-owned railway system and this discussion does include such railways. 21 In a few cases (e.g. Japan, the United Kingdom, and parts of Australia) these authorities are privatized. 22 The directors of one of the railways discussed in the case studies, EFE in Chile, noted the challenges of managing a publicly-owned firm, including political interference, financial mismanagement, lack of maintenance of infrastructure and rolling stock, the poor human capital of its labor force, and general disregard for customer satisfaction. 23 The most notable exceptions, other than the Americas, is Japan, where private railways carry more than half 28 the suburban passengers. operator, generally state-owned, providing the supporting the infrastructure operator, the train overwhelming majority of services for the general operator, or both. public. In recent years, many of these operators have been “unbundled.” Where this has created Lines of business separate railways in distinct geographical regions Railways were traditionally organized internally it is termed horizontal separation, as described along functional lines, such as infrastructure in the Chile case study below. Where separate maintenance, rolling stock maintenance, train infrastructure and train operating companies operations and so on. This structure was (TOCs) have been created it is called vertical production-led rather than market-led and often separation, as described in the Finland case presented customers with a choice of “take-it-or- study. leave-it” service quality. As competition from other modes developed customers voted with their Vertical separation is a key component of EU feet and “left-it.” Progressive railways responded railway policies. The intention is to encourage by reorganizing internally from a functional competition between TOCs using the same rail management structure to a “line-of-business” infrastructure network (often called above-rail structure, with internal passenger and freight competition) on a competitively neutral basis. businesses either directly controlling operating Separation of infrastructure management is resources such as wagons and carriages (as in the thought necessary to ensure a level playing field Morocco case study below) or buying them from for access among competing TOCs. EU policy has the functional departments. had mixed success in achieving direct above- rail competition in passenger services, though In many cases this led to the creation of separate contestability of freight services, by offering passenger and freight companies, with the a threat of competition, appears to have had original railway remaining as an infrastructure beneficial impacts even where actual market company, as in the case of Finland. In other cases, shares won by new operators are relatively only part of the operations were separated, such limited. The other stronghold of vertical separation as the suburban passenger (Metronet) and long- is Australia, where the impetus came from a distance passenger (Shosholoza Meyl) services in more general competition policy of promoting the South Africa case study. third-party access to essential infrastructure of a “natural monopoly” nature, be it railways, The creation of specific companies for specific pipelines or the electricity grid. A significant part businesses again provides much greater financial of the Australian rail network is now vertically transparency. Where there has historically been separated. cross-subsidization from freight services to passenger services, the creation of stand-alone Vertical separation is not the only way of providing passenger companies usually implies a need for access to rail infrastructure for third-party direct financial support from the government. operators. Operating over an adjacent company’s track by mutual arrangement has been widely Railway concessions practiced since the 19th century (and is currently Some governments have decided the best practiced by some of the private mining railways in institutional arrangement to deliver good railway northern Chile). What has changed in recent years performance is to contract it competitively from is that in some countries the concept of “access as a private operator as a concession or franchise. of right” has been introduced to allow customers a There are several variants, mainly depending on choice of train operator. This can be done without the nature and form of investment required. In vertical separation (e.g. as in Canada), but other some cases, the concessionaire may be required governments and regulators have taken the view to construct a new facility (possibly helped that its impact on competition will be relatively by a government contribution), provide the small unless there is a clear organizational rolling stock and then operate for a number of separation between infrastructure provider and years, (generally at least 20 if there has been a competing TOCs. substantial investment, as in the case of Gauteng in the South Africa case study). Alternatively, most An additional feature of vertical separation is that UK franchises are for less than 10 years because it provides a much clearer split between the costs network investment is the responsibility of a of infrastructure provision and train operations separate company (Network Rail), most operating than is generally available from an integrated assets form part of the franchise, and the rolling operator. Where governments are required to stock is leased from a third-party for the period of contribute to the cost of operating the railway, the franchise. there is a better-informed choice between 29 Experience with railway concessions worldwide (such as some in Africa), the promised upgrading has been mixed. In the case of freight railways, a and modernization has often been done poorly or distinction should be drawn between those that not at all, and the railway may be in worse shape involve constructing a new facility and those that than when it was concessioned. (This was the are essentially taking over an existing operation case with New Zealand.) with requirements to maintain and, where needed, upgrade and modernize. If the former concessions In the case of passenger operations, concessioning fail, and some have failed spectacularly, the facility has generally generated significant operating still exists and the losers are generally those efficiencies (such as in Germany’s regional from whom the concessionaire has borrowed networks) and in some cases (such as some of the money to finance the project (an example of this UK franchises) operators are paying a premium is the Adelaide-Darwin line in Australia). Several in order to operate. Concessioned long-distance existing freight railways, which have been passenger services also operate successfully concessioned, have since flourished (e.g. Brazil without subsidy on some routes in Australia. and most in Australia). However, in other cases ORGANIZATION AND MANAGEMENT OF RAILWAY SYSTEMS The five case studies provide a wide range of management models. Only one and a half (Morocco and northern Chile) are still vertically integrated in the sense that both infrastructure and train operations are undertaken by a single organization. However, even in Chile, there is provision in the current draft law for third parties to operate on payment of access charges. Of the others, two (southern Chile and South Africa) still combine infrastructure with some train operations—freight in the case of South Africa and passenger in the case of southern Chile—while third parties undertake other train operations. South Korea is integrated in the sense that infrastructure maintenance and operations are undertaken by the same organization responsible for train operations, but in this case the infrastructure is owned and ultimately managed by a third party, which contracts its maintenance and operations back to the railway. Finally, Finland conforms to the EU model with separation of above-rail (passenger and freight) activities and infrastructure management. Sweden takes this one further and has separated the freight and passenger operators in independent companies. Germany has many third-party passenger and freight operators on its network but the dominant operators in both sectors are German railways’ (DB) subsidiary companies, and these are in a common group structure with DB Netz, the infrastructure manager. Table 5.1 summarizes some features of railway industry structure in the five case study countries and three comparators. 30 TABLE 5.1 Railway management features in case study countries VERTICALLY VERTICALLY SEPARATED OPERATORS CASE STUDY INTEGRATED COUNTRIES OPERATOR PASSENGER FREIGHT INFRASTRUCTURE Public, some FINLAND No Public Public private SOUTH AFRICA Freight only - public Public - - MOROCCO Yes – public - - - SOUTH KOREA Operationally – public - - Infra authority CHILE (SOUTH) Passenger only – public - Private - CHILE (NORTH) Yes – private - - - FOR COMPARISON JAPAN Yes – public and private Public Several public Private (in and private addition to GERMANY In practice – public operating integrated regional public) services Public and SWEDEN No Public Public private FUNDING OF THE RAILWAY SECTOR Most passenger services in the world fail to cover defined in terms of service frequency, capacity, their operating costs24 and mechanisms therefore reliability and so on), the government is liable need to be established for funding to fill the gap to pay the contracted price just as in any other between revenue and expenditure. In some cases commercial transaction, so the railway has the this is still through “deficit financing” basis, that opportunity to operate commercially. is, the government just pays the difference at the end of the year. This does little to incentivize In practice, the PSO approach is only as effective the railway to operate more efficiently or help as the cost calculations that form the basis the government understand why the deficit is of the payments. These tend to be closely occurring and what it is really paying for (e.g. scrutinized by rigorous Finance Ministry officials service or inefficiency). and gaming strategies in which railways inflate cost estimates with the expectation that their A Public Service Obligations (PSO) framework financial counterparts will reduce them anyway is designed to address these issues by defining can influence the process. Many governments find specific services that will be provided by the it convenient, where they have the opportunity, railway and setting a price for them that then to just instruct the railway to cross-subsidize forms a contract between the government (or internally, as is almost certainly being done for KTX local government) and the railway. As long as the in South Korea, and from phosphates in Morocco railway delivers the contracted services (normally and export coal and iron ore in South Africa. 24 The main exceptions are the Japanese suburban services, some of the high-speed services, and some of the franchised services in United Kingdom. But there is a wide variation in what is included as a cost. Suburban passenger fares on many railways are controlled well below what the passengers might be prepared to pay. 31 The PSO model works most effectively when China, India, and Russia—freight revenue certainly financial accounts that have been externally supports a disproportionate share of the network audited can be produced in support of the PSO costs that are shared with passenger services. claim implying that the activities proposed for PSO payments be isolated in their own “ring- The case studies present a spectrum of fenced” set of audited accounts. A good example arrangements (Table 5.2). Morocco represents the is the contract for the Helsinki suburban services more traditional arrangements, making a profit from in the Finland case study. its operations in total, but almost certainly with a cross-subsidy from the phosphate traffic to other There are several railways worldwide that operate services. The private mineral railways in northern without government funding, but these are mostly Chile also operate independently, as do many similar freight railways—and in most cases are privately mineral railways worldwide. Finland exemplifies a operated or have a monopoly on the transport railway sector unbundled into independent above- of (normally) coal or minerals. Historically, many rail and infrastructure companies. Local government passenger services were supported by internal tenders contracts for suburban services, but cross-subsidization from freight services but long-distance passenger services and freight are as this became progressively more difficult self-supporting, including capital expenditure on many railways were unbundled with freight rolling stock. However, the Finnish infrastructure being operated commercially and passenger agency only recovers about 16 percent of its railways funded either directly through PSOs recurrent expenditure from access charges (a and contract arrangements or indirectly through similar proportion to the infrastructure authority in the government contributing to infrastructure Sweden) and this represents a substantial indirect costs. In three of the world’s biggest railways—in subsidy to both passenger and freight services. TABLE 5.2 Sources of railway funding VERTICALLY VERTICALLY SEPARATED OPERATORS CASE STUDIES INTEGRATED OPERATOR PASSENGER FREIGHT INFRASTRUCTURE Local FINLAND - Commercial Central government government SOUTH AFRICA Commercial Public - - MOROCCO Commercial - - - SOUTH KOREA Commercial - - Central government Commercial (but CHILE (SOUTH) central government for - Commercial investment) CHILE (NORTH) Commercial - - - FOR COMPARISON Shinkansen lines JAPAN Commercial - Commercial leased from asset agency Central government Local GERMANY for infrastructure and Commercial - government passenger Central SWEDEN - and local Commercial Central government government 32 In South Korea the sector is still integrated from only recovers a proportion of the capital cost). an operational perspective. The infrastructure authority contracts all maintenance and Southern Chile and South Africa are both partially operation directly to the above-rail operator, vertically integrated operations, one being Korail, which therefore remains managerially infrastructure with passengers and the other integrated. However, the access charges paid by infrastructure with freight. In both cases these are Korail only represent a proportion of the total expected to operate commercially. In the case of cost of the contract payment it receives from Chile, however, this is through what is effectively the infrastructure authority. (A variant on this internal cross-subsidization through the access approach is used in Japan, where the Shinkansen charges charged to freight and passenger services infrastructure was transferred to a separate respectively although the freight operators are agency when JNR was split and privatized. still able to operate commercially. However, the Shinkansen infrastructure is now leased back to South African passenger operators require heavy the inter-city train operating companies at a price government support, both for operations and for that the service can sustain, and that typically investment in rolling stock. PERFORMANCE OF RAILWAY SECTOR Table 5.3 summarizes rail performance for the of Japan’s passenger business. South Africa case study countries. Most of the case studies carries over 500 million suburban passengers are small- to medium-sized railways. Only South but has almost completely lost its long-distance Africa has a sizeable network, comparable with passenger business, as has Chile. South Africa has Japan or Germany, with the others having 2,000- by far the largest freight business, carrying over 6,000 km of track. South Korea has a large 200 million tonnes p.a., half of which is export passenger business, carrying nearly 1 billion coal and minerals. The other railways carry 10-40 suburban passengers and over 100 million long- million tonnes p.a., with average hauls of 200-500 distance passengers but overall is only 10 percent km. TABLE 5.3 Railway performance indicators TRAFFIC (BILLION PASSENGER-KM, NET TONNE-KM) CASE STUDY NETWORK SIZE COUNTRIES (ROUTE-KM) OTHER COMMUTER FREIGHT PASSENGER FINLAND 5,900 1 3 9 SOUTH AFRICA 21,000 10 0.4 131 MOROCCO 2,100 - 4 6 SOUTH KOREA 3,600 15 21 10 CHILE (SOUTH) 1,800 1 0.2 2 CHILE (NORTH) 3,500 - - 2 FOR COMPARISON JAPAN 26,000 400 24 GERMANY 33,500 80 106 SWEDEN 11,000 6 23 33 VI. Roads BACKGROUND In most countries, road transport is the dominant the spending on roads ranges from 1-3 percent mode of transport accounting for more than 80 of GDP, with the lower limit associated with percent of passenger-km and over 50 percent industrialized countries (where much of the basic of freight tonne-km. Roads ensure spatial and road infrastructure is in place) and the higher limit temporal connectivity, commonly expressed in with developing countries in the expansionary indicators of accessibility and mobility. Typically phase of infrastructure development. ORGANIZATION AND MANAGEMENT OF ROADS In nearly all countries, the ownership of the main or municipal level by city governments or urban common-user public road network is vested by councils; law in the state or in a state-owned agency. There • Local access and community roads, which are also some privately owned or concessioned sometimes remain unclassified, are managed roads, including high-performance expressways by local governments/community roads (e.g. in Chile, Finland, Morocco, South Korea, and associations. South Africa); roads linked to forestry (e.g. in Finland); mining roads (e.g. in Chile); plantation The functions of a road administration can be split and agricultural roads; and rural and urban access conveniently into: roads. In most countries, roads are administered directly by governments (including sub-national Client function: Activities related to the planning levels of government) with capital investments and management of road operations—the client and operations and maintenance (O&M) role is concerned with specifying the activities to expenditures on main roads funded primarily be carried out, determining appropriate standards, from the consolidated national budget. Revenues commissioning works, supervising implementation, related to road use, such as taxes on fuel and controlling works, and monitoring; and vehicle ownership, are typically deemed to be part of general revenues (only Morocco among the five Supplier function: Activities related to execution case study countries has a dedicated Road Fund of works—the supplier role is concerned with with earmarked taxes). delivering the defined road works to an agreed quality standard, on time, and within budget. Based on some form of functional classification, the road network is typically divided into Separating these clarifies roles and increases administrative classes: the focus and specificity of action, both of the management and the works execution functions. • Major trunk roads (commonly designated as Arrangements between the client and the supplier national roads), including expressways and toll are normally defined in some form of contract. Both roads, are normally managed at the national parties have incentives to increase operational level by a government department (as in Chile performance. Greater benefits in effectiveness and Finland), and are often complemented and efficiency have been achieved as a result of by a semi-autonomous public authority, or such separation irrespective of the organizational an autonomous corporation/company (as in structure and hierarchal dependencies. Finland and Morocco, South Africa, and South Korea). South Africa (SANRAL) have a complete separation • Regional and rural roads are typically managed between the client and supplier functions in at the sub-national level by state/provincial/ the construction and maintenance of road local governments; however, in Chile and infrastructure; they have no in-house (force account) Finland, all roads are managed by the national capacity for this purpose. Table 6.1 summarizes the roads/transport entity through decentralized arrangements in each of the case study countries. regional departments; This table does not include the attributes of sub- • Urban roads, which may also include some toll national road organizations at state, provincial or 34 roads, are normally managed at the metropolitan municipal/local levels (e.g. in South Africa and South Korea). In Chile, Morocco, and South Korea, roads are have a board of directors that often appoints administered through a government department the chief executive officer. In addition, some within a ministry (except for expressways and countries (e.g. Morocco, South Africa, and South concessioned roads); while in Finland and South Korea) are providing dedicated revenue sources Africa, roads are administered through agencies for these commercially oriented enterprises in with an autonomous corporate structure. A order for them to be (at least to some degree) common feature of the road sector in all the five independent managerially and free of the year-to- countries is the use of private-public partnerships year vicissitudes of national budget funding. for provision and operation of expressways. Many examples of such new management While many road organizations operate as arrangements are working well: Austria has government departments or agencies, an ASFINAG; Morocco has the Société Nationale des increasing number are being structured along Autoroutes du Maroc (ADM); South Africa has commercial lines with greater functional and South African National Roads Agency Limited financial autonomy. These organizational changes (SANRAL); South Korea has Korea Expressway have been prompted by public concern with Corporation; New Zealand has NZ Transport politically driven road investment priorities, rising Agency; and Australia has VicRoads in Victoria maintenance costs, congestion, and a gradual State, NSW Road and Traffic Authority in New reduction in quality of service demonstrated by South Wales, and RoadTek in Queensland. Few higher accident rates, increase in travel time, and of these road agencies are fully autonomous a reduction in riding comfort. A few venerable and most report to a parent ministry that has a highway agencies have been turned into not- wider infrastructure, public works, transport or for-profit joint stock companies or have been communications portfolio. incorporated as state-owned enterprises under a companies act. The fundamental characteristic Given their spatial spread, roads commonly are is to separate management and service delivery administered through a geographically dispersed in the roads sector from policy making. They organization with varying levels of functional TABLE 6.1 Organization of the roads provision sector AUTHORITY/ CASE PRIVATE CORPORATION FOR ROAD STUDY MINISTRY/ AGENCY QQQA ROAD EXPRESSWAYS AND/OR FUND COUNTRIES OPERATORS NATIONAL ROADS Ministry of Transport FINLAND (Finnish Transport None Yes No Yes Agency) Ministry of Land, SOUTH Transport and Korea Expressway Yes No Yes KOREA Infrastructure Corporation (Roads Bureau) Ministry of Public Works Coordination Directorate for CHILE Yes No Yes (Roads Directorate)25 Public Works Concessions South African National SOUTH Ministry of Transport Roads Agency Limited Yes No Yes AFRICA (SANRAL) Ministry of Equipment, Société Nationale des MOROCCO Transport and Logistics Yes Yes Yes Autoroutes du Maroc (ADM) (Roads Directorate)26 25 In Chile, two other ministries have a role in transport: The Ministry of Transport and Telecommunications (policy and regulation) and the Ministry of Housing and Urban Development (urban roads and streets). 26 Separate directorate for Road Transport and Safety in Morocco. 35 decentralization. The norm is for policy, planning, asset declining from tens of thousands of personnel to management, budget and finance, and HR functions a few thousand (for e.g. in Chile and South Korea) to be retained at the center, with construction and in some instances just a few hundred (for e.g. in and maintenance implemented through regional South Africa and Finland). This has been achieved and local offices. In a few instances, the regional mainly by gradually replacing in-house public administrations operate as fully autonomous units force-account construction and maintenance units (as in Finland and South Korea) responsible for with competitively selected private contractors all road management functions (except strategic using performance-based contracts to improve planning, financial management, and monitoring efficiency and foster innovation in construction and evaluation responsibilities) under performance and maintenance works, and by outsourcing agreements with the central administration. some client functions such as surveys and design, works supervision, quality assurance, and asset Over the past two decades, road organizations management to private consulting companies. have become slimmer with the number of staff FUNDING OF ROADS Table 6.2 summarizes road-funding sources in each of the case study countries. TABLE 6.2 Funding sources for road network CASE STUDY NATIONAL DEDICATED TAXES ROAD TOLLS OTHER COUNTRIES BUDGET FINLAND Yes No No PPPs Bonds, PPPs, other Yes (shared among SOUTH KOREA Yes Yes instruments such as all transport modes) Land Value Capture CHILE Yes No Yes PPPs SOUTH AFRICA Yes Yes Yes PPPs MOROCCO27 Yes Yes Yes PPPs 36 Only Morocco has a traditional Road Fund with earmarked taxes. 27 Toll roads vehicles (United Kingdom and Australia). There Some roads carrying high average annual daily are advantages with such a system over tolls in traffic (AADT) volumes (typically defined as that: exceeding 10,000 to 15,000 vehicles/day) are being tolled in many countries, including in all • More traffic, and in particular heavy trucks and the case study countries except Finland. Tolling buses, transfer to the new facility rather than generates revenues that can either help fund continue to use the old one because of the public investment or be used to secure long- lower variable cost of use, which improves the term private sector finance. Some toll roads are environmental return; freestanding (mostly in developing countries), • The ramp-up of generated traffic comes sooner, while others are operated as an integrated toll road improving the economics of the project; and network with high-volume roads cross-subsidizing • Toll collection is simpler or replaced by the lower volume ones (primarily OECD countries monitoring and documentation of traffic flows. like France, Italy, Japan, South Korea, and Spain that fund road-building through distance-based Road user charges tolls collected at physical or electronic barriers). Budget pressures and fluctuations in national These tolled roads may be managed by a specialist budget allocations have caused countries to seek unit of the national ministry responsible for roads, alternative road-funding mechanisms. Toll roads a public toll road authority, or may be owned and are useful to help fund parts of the national road operated by a private concessionaire. network but cannot meet the needs of the entire road network. A number of countries have opted A major attraction of toll roads is their potential for a more general “fee-for-service” approach: to attract Direct Foreign Investment (DFI) road users pay a special levy added to the base under a variety of public-private partnership price of fuel or a special tax on vehicles and the (PPP) arrangements. With advances in traffic proceeds are earmarked for roads purposes such management and tolling technology (automatic/ as road maintenance, road safety improvements electronic toll collection/electronic road pricing), and so on. Morocco, South Africa, and South Korea it is now possible to price road use by the type have special fuel levies dedicated for road-related of vehicle, the time of day, and distance travelled, expenditures. In contrast, Chile and Finland impose and also to charge for externalities such as road heavy taxes on vehicles and fuels, but they are congestion and environmental pollution. Although part of general taxation. tolled roads rarely account for a large part of the trunk (arterial) road system and are usually a very A revenue base of flat fuel taxes and dependent small fraction of the overall road network, they on traffic levels can be eroded by economic often carry a large share of road traffic. slowdown, inflation, a switch to cleaner fuels and vehicles (particularly electric vehicles, plug- Public-private partnerships in hybrids and CNG-fueled vehicles), as well as Chile, Finland, Morocco, South Africa, and South by the increasing fuel efficiency of conventional Korea have all utilized PPP arrangements to vehicles, as has occurred in the United States. finance parts of their expressway systems. There There is a growing recognition in OECD countries is a strong international trend to finance and of a need to shift from fuel taxation to road- implement large and complex highway projects usage-based taxation. through PPP or private finance initiative (PFI) in the United Kingdom. Canada (the Confederation Distance-based charging for road use is not Bridge) and Chile were early developers of new. New Zealand introduced a system of delivery via long-term (20-40 years) design-build- distance-based Road User Charges (RUC) in 1978 finance-operate and transfer (DBFO) concessions for all vehicles over 3.5 tonnes on all public roads, in which financing mostly came from equity, and on all diesel vehicles (including cars, vans, private bank loans, and project bonds, while and other light vehicles). Switzerland introduced funding (servicing the debt, return on equity, and distance-based charging, called the LSVA, in operating costs) was mostly provided through toll 2001 on all vehicles over 3.5 tonnes on all public income supplemented by annual general budget roads. Austria introduced distance-based charging, allocations where needed. called GO Maut, for all vehicles over 3.5 tonnes on motorways in 2004. Germany followed suit with Debt servicing of private finance with general distance-based charging called LKW-Maut in 2005 budget revenues may alternatively be based on all trucks over 12 tonnes on all motorways on a system of availability payments to the (and some primary “A” roads). The Czech Republic, concessionaire related to traffic flow and safety Poland, and Slovakia also have similar systems. in combination with shadow tolling of heavy The United Kingdom and Russia are preparing 37 schemes for distance-based charging for heavy revenue from that traffic to fund the maintenance vehicles. Four US states—Kentucky, New Mexico, and continued development of its network. Since New York and Oregon—have a weight/distance tax then, Czech Republic, Hungary, Slovakia, and for trucks not dissimilar to the systems in place Slovenia have also required both domestic and in New Zealand and Switzerland. Oregon is now visiting drivers to purchase vignettes before they contemplating a distance-based charging scheme can use any motorway: these countries applied to replace fuel tax revenues that currently accrue the charge in parallel with the growth of a core to a federally administered Highway Trust Fund motorway network such that users perceived from which proceeds are then redistributed to they were paying mainly for new benefits, not for state and local governments. something that was previously free at point of use. Romania and Bulgaria have vignette schemes Other countries have introduced time-based tied to the whole national network and these charging of their entire motorway network, notably spread the burden of total road funding across all Austria and Switzerland. The vignette system users. Belgium and France are also now planning requires prepaying for access to a motorway/ motorway-based vignette schemes for cars as national road network covering a set period that well as for heavy goods vehicles. can range from a day to a year. Vignettes are stickers that are put on the vehicle windscreen as Technology-driven distance-based and time- proof of payment. International road vehicles in based road charging schemes are the precursors transit also need the vignette (usually purchasing to road pricing based on direct charges for the the one-day or one-week versions). Switzerland use of roads, which is done in some cities (notably introduced the first scheme and Austria followed Central London) but has not yet been adopted suit in 1997; both levying the charge for an on a national basis except for Singapore. Such established network hitherto perceived as free. charges could be used not only to raise revenue Switzerland established the principle that a for road funding, but also for managing transport country whose motorway network was heavily demand to reduce traffic congestion, air pollution, used by foreign transit traffic could raise new greenhouse gas emissions, and road accidents. PERFORMANCE OF THE ROAD SECTOR Common road system performance indicators and convenience. Advanced traffic management include the physical condition of the road network, systems provide reliable data on travel time and the incidence of road accidents and traffic fatalities, traffic congestion to assess mobility (Finland and and the cost of vehicle operation as reflected in South Korea are leaders in the deployment of the cost of road transport. Road density (with such systems). Geographical Information Systems respect to population, land area, or GDP) and road (GIS) offer road agencies the means to assess proximity measures (proportion of population connectivity in terms of reliable, climate-resilient living within a given distance from an all-weather road access to households, settlements, markets, road) are commonly used performance indicators. and basic health and education services. Table However, these are neither good indicators of 6.3 applies some standard indicators to the case connectivity nor useful in making inter-country study countries. comparisons, partly on account of deficient road inventories and classification systems. Moreover, There is a seemingly close correspondence the physical condition of infrastructure does not between income (GDP/capita) and road conditions necessarily equate with the quality of service in and safety. As countries grow economically and terms of reliability, convenience, and comfort. become wealthier, there is a commensurate improvement in road quality and safety. There is In general, higher order expressways and paved also less dependence on earmarked taxes to fund trunk roads have higher serviceability than lower road expenditures in higher-income countries. order secondary and tertiary roads. This directly The existence of a dedicated Road Fund does reflects the distribution of traffic on the road not guarantee good road performance, at least network and partly the organizational and funding not in upper-middle- to high-income countries. arrangements for the different classes of the A combination of sound planning and budgeting road system. With the help of appropriate asset practices, including the ability to attract private management systems, road agencies (e.g. in South finance, appears to be a better option to secure Africa) are beginning to use performance indicators good roads. 38 that are directly related to user safety, comfort, TABLE 6.3 Road performance indicators for case study countries GLOBAL COMPETITIVENESS ROAD CONDITION INDEX (2013-14) NETWORK ROAD FATALITIES OF PAVED (QUALITY OF (% PAVED) COUNTRY ROADS ROADS) (GDP/CAPITA) (PERCENT POOR NO. PER NO. PER COUNTRY CONDITION) RATING TOTAL NAT’L 100,000 10,000 RANK POPULATION VEHICLES FINLAND 9/148 6.1/7.0 74 100 7 5.0 0.6 (USD35,900) SOUTH KOREA 15/148 5.8/7.0 80 98 5 14.1 2.3 (USD22,660) CHILE 27/148 5.4/7.0 30 80 6 12.3 4.7 (USD15,450) SOUTH AFRICA 41/148 4.9/7.0 25 100 1828 31.9 16.6 (USD7,508) MOROCCO 70/148 4.0/7.0 72 89 45 11.8 13.5 (USD2,850) Road traffic accidents are a major cause of death, especially among young adults. In industrialized countries, only about 15-20 percent of fatalities involve pedestrians, non-motorized vehicles, and motorcycles. In developing and transition countries, the figure is closer to 50 percent and is as high as 70 percent in Asia. In developing and transition countries, road accident rates per 10,000 vehicles tend to be 10 to 20 times higher than in industrialized countries and cost between 1.0-1.5 percent of GNP. A major challenge for all road agencies in industrialized and developing countries alike is to build safer and forgiving roads that contain the scourge of road accident fatalities and injuries. Fortunately more attention is being paid to road accidents. Efforts are underway to mobilize private finance for road safety interventions and to set up accident reporting systems to enable road safety interventions to be planned and implemented more effectively. About 95 percent of expressways and national roads in South Africa (under SANRAL) are in good condition. 28 39 VII. Public Transport BACKGROUND The type of public transport infrastructure and most of the case study countries, while metro or services provided varies considerably among the light-rail transit have been or will be implemented case study countries. While regular bus services, in some (Table 7.1). This section mainly taxi services, and inter-city bus services are concentrates on road-based public transport provided in each country, the same is not true for (principally buses) in urban areas but with some other public transport services. Bus rapid transit attention also to inter-city buses. has been implemented or will be implemented in TABLE 7.1 Modes of public transport in case study countries MODE FINLAND CHILE MOROCCO SOUTH SOUTH SAUDI DUBAI KOREA AFRICA ARABIA (UAE) TAXI SERVICE Yes Yes Yes Yes Yes Yes Yes INFORMAL CITY BUS SERVICE (PRIVATE SECTOR SERVICE No No Yes No Yes Yes No WITH LIMITED ROUTE PLANNING) REGULAR CITY BUS Yes Yes Yes Yes Yes Ongoing Yes SERVICE BUS RAPID TRANSIT Yes Yes No Yes Yes Ongoing Yes (BRT) INTER-CITY BUS Yes Yes Yes Yes Yes Yes Yes SERVICE COMMUTER RAIL Yes Yes Yes Yes Yes No Planned TRAM OR LIGHT-RAIL Yes No Proposed Proposed No Planned Yes TRANSIT METRO Yes Yes Proposed Yes No Ongoing Yes MANAGEMENT AND ORGANIZATION Government entities involved Institutional responsibilities for the provision of • Regional/provincial governments; public transport services in urban areas in all case • Municipal governments; and study countries involve at least two levels, and • Special-purpose metropolitan transport usually three or four levels of government: agencies. • National government agencies (most frequently Table 7.2 summarizes the allocation of 40 the Ministry of Transport or equivalent); responsibilities for urban public transport in the case study countries, though the boundaries service planning, contracting and management of responsibility are sometimes less clear than of transport operations, setting fares, and the implied by the tables. An X denotes a major role provision of public transport infrastructure within and an O denotes a significant but subsidiary role. their jurisdictions. Within larger metropolitan areas the metropolitan authorities typically have National government entities have a dominant more authority than municipal governments as role in (a) establishing national public transport they have been created in response to the need to policies, (b) enacting legislation affecting public address travel that crosses municipal boundaries. transport, and (c) vehicle licensing. They also play a significant role in funding public transport Private sector operators, especially of bus infrastructure and in providing operational services, are the principal providers of public subsidies, typically in combination with required transport services in urban areas. However, local government contributions. The central metropolitan authorities and municipal government also at times establishes the governments sometimes do provide services with allowable fares to be charged for some urban their own carriers. There is an increasing trend to public transport services. seek investments from the private sector in public transport infrastructure through public-private Municipal governments or special metropolitan partnership (PPP) arrangements. transport authorities are typically responsible for TABLE 7.2 Organization of urban public transport COUNTRY RESPONSIBILITY FOR URBAN TRANSPORT RESPONSIBILITY FOR PUBLIC TRANSPORT POLICY AND FUNDING OPERATIONS & INFRASTRUCTURE SINGLE MULTIPLE METROPOLITAN METROPOLITAN INDIVIDUAL NATIONAL NATIONAL NATIONAL TRANSPORT TRANSPORT MUNICIPAL GOVERNMENT MINISTRY MINISTRIES AUTHORITY AUTHORITIES GOVERNMENT MINISTRIES FINLAND CHILE MOROCCO SOUTH KOREA SOUTH AFRICA DUBAI EMIRATE 29 SAUDI ARABIA This is a national transport authority in the case of Saudi Arabia. 29 41 Table 7.3 summarizes the wider roles of services, which is largely the responsibility different groups in the provision of urban of either national or regional government public transport. entities. The role of municipal and metropolitan authorities is largely limited to reviewing, in Inter-city bus services in the case study some cases, public transport service proposals countries are, for the most part, provided by the to their jurisdictions and provision of terminals private sector with either national or regional for these services. In larger metropolitan areas, government entities authorizing the service, such as the greater Seoul Metropolitan Region, and providing subsidies where needed (Table the transportation authority might have a more 7.4). Unlike urban public transport, metropolitan significant role in service planning and actual transport authorities and municipal authorities provision of service. typically have a minimal role in inter-city bus TABLE 7.3 Allocation of roles in urban road-based public transport REGIONAL/ METROPOLITAN NATIONAL MUNICIPAL PRIVATE FUNCTION PROVINCIAL TRANSPORT GOVERNMENT GOVERNMENT SECTOR GOVERNMENT AUTHORITY LEGISLATION NATIONAL TRANSPORTATION POLICY INFRASTRUCTURE FUNDING OPERATIONAL SUBSIDIES VEHICLE LICENSING ROUTE LICENSING FARE SETTING SERVICE PLANNING CONTRACTING & MANAGEMENT OF PUBLIC TRANSPORT OPERATIONS PROVISION OF PUBLIC TRANSPORT INFRASTRUCTURE PROVISION OF PUBLIC TRANSPORT SERVICE = Very common = Frequent 42 = Sometimes TABLE 7.4 Allocation of roles in inter-city bus public transport REGIONAL/ METROPOLITAN NATIONAL MUNICIPAL PRIVATE FUNCTION PROVINCIAL TRANSPORT GOVERNMENT GOVERNMENT SECTOR GOVERNMENT AUTHORITY LEGISLATION INFRASTRUCTURE FUNDING OPERATIONAL SUBSIDIES VEHICLE LICENSING ROUTE LICENSING FARE SETTING SERVICE PLANNING CONTRACTING & MANAGEMENT OF PUBLIC TRANSPORT OPERATIONS PROVISION OF INFRASTRUCTURE PROVISION OF PUBLIC TRANSPORT SERVICE = Very common = Frequent = Sometimes FUNDING FOR PUBLIC TRANSPORT Funding of public transport comes from various from the implementing authority (for e.g. Finland sources. A significant share is from fare-paying and Morocco). passengers, but it usually does not cover service- operating costs, much less capital of vehicles Beyond fare-paying customers and allocations of and infrastructure. Most of the operating deficit subsidies from the various levels of government, is funded by the local governments (municipal or there is the question of what other specific metropolitan transport authorities) responsible sources of funding might be dedicated for funding for the service, and from transfers from either public transport operations or infrastructure. the national government (or a combination Table 7.5 illustrates the wide range of potential of national and regional governments) to the dedicated sources of funding, some of which have implementing authority. The more sophisticated been utilized by the case study countries. funding frameworks involve clear guidelines for sharing of funds and the required contributions 43 TABLE 7.5 Potential funding sources for public transport services (general) SOURCE OF FUNDS EXAMPLES FARE REVENUE Universal source of funds, seldom adequate INTER-GOVERNMENT TRANSFERS (FEDERAL SUBSIDY) All case study countries use this LOCAL GOVERNMENT BUDGET (REGIONS AND CITIES) Virtually all countries use this SPECIFIC DEDICATED SOURCES OF FUNDING: • Advertising on the system Seoul • Metropolitan transport tax (on businesses) Paris • Sales tax United States • Property/ building tax South Korea, United States • Gasoline tax United States • VAT Morocco • Road/tunnel tolls South Korea • Congestion fee London • Bonds Seoul, Morocco, United States • Public-private partnerships (PPP) South Korea, Morocco PERFORMANCE OF PUBLIC TRANSPORT The metropolitan populations of the principal percent of work-related trips as compared to only cities in case study countries vary substantially, 14 percent in Johannesburg. ranging from slightly over 1 million (Helsinki) to over 20 million (Seoul). The scale and composition of the public transport systems serving these cities vary correspondingly. For example, the mass transit system30 of metropolitan Seoul is 393 km in length as compared to only 21 km in Helsinki. Tables 7.6 and 7.7 show features of public transport systems in ascending order of city size. Care should be taken in comparing cities as statistical methods may differ. The performance of these systems varies both in qualitative and quantitative terms. For example, the Seoul public transport system (bus and rail) captures 63 44 Mass transit system is defined here as rail systems (metro, commuter rail, and LRT) and BRT. 30 TABLE 7.6 Comparison of mass transit systems in case study capital cities31 MASS MASS DAILY DAILY PUBLIC METROPOLITAN TRANSIT TRANSIT RIDERSHIP / TRANSPORT COUNTRY POPULATION SYSTEM LENGTH / KM OF MASS PASSENGERS (MILLION) LENGTH CAPITA TRANSIT /CAPITA (KM) (KM/MILLION) LINES FINLAND (HELSINKI) 1.02 21 20.6 0.30 2,700 CHILE (SANTIAGO) 5.98 163 27.3 0.35 12,800 SOUTH KOREA (SEOUL) 24.1 393 16.3 0.25 15,400 SOUTH AFRICA 7.15 25 3.5 0.01 1,500 (JOHANNESBURG) TABLE 7.7 Journey to work by different modes (percent) TAXI/ BUS/ COUNTRY RAIL SHRD CAR FOOT BICYCLE OTHER BRT TAXI CHILE 24 13 1 23 35 2 2 (SANTIAGO) SOUTH KOREA32 28 35 6 26 5 (SEOUL) SOUTH AFRICA 4 10 34 37 12 3 (JOHANNESBURG) Defined as metro, commuter rail, tram, and BRT. 31 Motorized transport only. 32 45 VIII. Lessons Learned Transport is a large and diverse economic sector and in most cases this is responsible, with other encompassing passenger and freight operations, stakeholders, for producing a national logistics urban and rural areas, public and private transport strategy [in Morocco the ministry has sponsored sectors, economic and social needs, and domestic a specialist Agency for the Development of and international markets. While this diversity Logistics Competitiveness (AMDL)]; exists in all countries, the scale and balance of each component and their influence on transport • In three countries the ministry’s responsibilities systems and sector governance naturally differ. It are organized administratively by mode and is therefore important to be cautious in applying in two by function, though the distinction the prescriptions of one country to the transport is perhaps not as great as it seems as market circumstances of another. Moreover, the those organized by mode have functional enabling environments will differ depending on departments within them, and those by historical, political, legal, and cultural factors. function have some mode-specific units in their However, it is possible to have confidence in internal organizations. the general applicability of particular approaches when they have been adopted in a number of In the ports sub-sector some common elements countries in which the market and enabling or tendencies within the case study countries are: conditions clearly differ. This section tries to capture those general lessons provided by the • Ministries of Transport determine national port case studies described above. development policy and strategic planning; In terms of the central ministries involved in • National maritime authorities are charged with transport governance in the case study countries: establishing and ensuring compliance with international maritime transport conventions • The specific ministry entities forming the peak and protocols, and policy and safety guidelines; government entities in transport differ because transport is often combined with other sectors • Ports (or groups of ports) are usually publicly (examples include telecommunications, land, owned and administered as “landlord” port infrastructure, equipment, etc.); authorities with private sector terminal and other operations within the ports; • The transport divisions of each ministry nevertheless have many common elements and • On balance there is a policy preference (not tendencies; always possible or perfectly realized) for competition between terminals and ports. • The central transport ministries in each country have, with very few exceptions, national In the railways sub-sector some common strategy, policy, and regulatory oversight of the elements or tendencies from the case studies are: sector on a comprehensive multi-modal basis; • Ministries of Transport determine national • In some cases particular executive functions railway policy and strategic planning of in regard to transport infrastructure provision, networks and are often the most important regulation or operations are carried out by funder of railway infrastructure; agencies reporting to the ministry, especially in Finland (where there is a single comprehensive • Most railways are constituted as companies transport agency) and South Africa (which has (whether owned publicly or privately); a series of specialist transport agencies and authorities); • Most national railways manage infrastructure and train operations in a vertically integrated • Nearly all the countries have published a way, even if the infrastructure is owned by National Transport Strategy covering all these another state institution; modes of transport with both multi-modal initiatives as well as mode-specific components; • There is a tendency to manage passenger and freight activities by different “lines of business” • Most countries have a unit or department in the or separate companies: rail freight is expected 46 ministry that is responsible for freight logistics to operate commercially; • Most railway passenger services require allocations remain the mainstay of capital financial support, sometimes from a co-owned development works. Chile and Finland impose freight operation, but (preferably) by a direct heavy taxes on vehicles and fuels, but they are government financial support. part of general taxation; In the roads sub-sector some common elements • A revenue base of flat fuel taxes and dependent or tendencies are: on traffic levels can be eroded by economic slowdown, inflation, a switch to cleaner fuels • Ministries with oversight of the transport/ and vehicles, as well as by the increasing fuel public works sector determine national roads efficiency of conventional vehicles. There is policy and strategic planning of networks, and a growing recognition in the more advanced ownership of the roads is vested in the public countries to shift from fuel taxation to road- sector; usage-based taxation; • The road network is typically classified by law • All of the countries have utilized PPP into several administrative classes for purposes arrangements, with tolls, availability payments of allocating responsibilities for management (shadow tolls), and/or bond financing to fund and funding, typically: parts of their network; » Major trunk roads, including expressways • South Korea and Finland are global leaders in the and toll roads, are normally managed at the application of Intelligent Traffic Systems (ITS) national level by a government department to their high-performance expressways, while (as in Chile and Finland), and are often other countries have introduced centralized complemented by a semi-autonomous traffic management systems on such facilities. public authority, or an autonomous corporation/company (as in Morocco, South In the public transport sub-sector some common Africa, and South Korea); elements or tendencies are: » Regional and rural roads that are normally • National government entities have a dominant managed at the sub-national level by role in (a) establishing national public transport state/provincial/local governments and policies; (b) enacting legislation affecting public urban roads by city governments or urban transport; and (c) vehicle licensing; councils; • National governments also play a significant • While road organizations mainly operate as role in funding public transport infrastructure government departments and agencies, an and in providing operational subsidies; increasing number are being structured along commercial lines with greater functional and • With few exceptions, the assignment of roles financial autonomy; and responsibilities for addressing public transport is complicated with overlaps and gaps • In bigger countries the road provision entities in responsibility at different government levels; are decentralized with construction and maintenance implemented through regional • Municipal governments or special metropolitan and local offices, sometimes with a high degree transport authorities are typically responsible of autonomy; for service planning, the contracting and management of transport operations, setting • There has been a significant downsizing of road fares, and the provision of public transport departments with the number of staff declining infrastructure within their jurisdictions; from tens of thousands of personnel to a few thousand (Chile and South Korea) and in some • Private bus operators are the principal providers instances just a few hundred (South Africa of public transport services in most of the urban and Finland). This has been achieved mainly areas, though metropolitan authorities and by outsourcing maintenance works (and some municipal government sometimes do provide client functions such as surveys and designs) to services with their own bus companies; competitively selected private contractors; • Inter-city bus services are mainly provided • Three of the five countries use earmarked by the private sector with either national or taxes to fund road expenditures, but only one regional government entities authorizing the (Morocco) has a traditional Road Fund. Budget service, and providing subsidies where needed. 47 In the transport sector as a whole the lessons of international experience in reorganizing sector governance are confirmed as they have been long understood, to paraphrase Amos (2006)33: • Restructuring a complex industry or organization is a long-term process. It often requires legislative, as well as institutional and management changes, and a period of cultural adjustment within organizations before benefits emerge. Unrealistic timetables that do not allow for the time needed for political process, for the consensus building needed for radical change, and the need to overcome organizational inertia are likely to be frustrated. • Structural change is only a means to an end. That end is to improve performance. Governments can create the policy platform and framework for this improved entity performance but only managements and their employees can deliver the goods. Close attention therefore needs to be given to investing in the actual process of business change management, attraction of the best skills and experience, worker consultation and participation, creation of the appropriate culture, incentive structures, and so on. • Even within a particular sector of transport, such as a highways agency, or rail or port company, one structural model does not fit all. The international experience needs to be mined, but then shaped to local markets and circumstances. • Public enterprise reform is not a “fire and forget” process. Good public custodianship requires explicit supervisory and monitoring mechanisms. When government enterprises are not working well it is often the processes of public governance that need scrutiny as much as the enterprises themselves. • Transport markets and technologies are continually changing. New transport demands and opportunities will emerge with economic development and technological progress. The objective of transport policy should not be to achieve a given end state, but to create an industry adaptable and responsive to change. 33 Amos 2006, cited in World Bank (2008) Safe, Clean and Affordable: Transport for Development available at 48 siteresources.worldbank.org/INTTRANSPORT/.../Transport Fh[fWh[Z\heccWj[h_WbWii[cXb[Z_dW h[l_[mkdZ[hjWa[dXoj^[MehbZ8Wda\ehj^[ C_d_ijhoe\JhWdifehjWdZ9ecckd_YWj_edi" j^[IkbjWdWj[e\EcWd
Группа Всемирного банка · Working Paper
On the move : a look on the transport sector’s management in Chile, Finland, Morocco, South Africa, and South Korea
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