DRIVING LIKE THE WIND

Over the last ten years a number of large-scale road-building projects using considerable budget funds and borrowed money have been carried out in Azerbaijan. However, the construction and maintenance of the highways in a working condition demands substantial funding, and for that reason the country intends to look to foreign experience in the building of toll roads with a view to attracting private investors here. Changes to the law "On highways", which were adopted by the Milli Maclis recently, legalized the construction of commercial highways in Azerbaijan.

A common practice

Over the past decade over $3bn has been invested in the development of the country's road transport infrastructure. The overall length of first-category highways brought into service in the past 5-6 years was 1,500km. And the length of Azerbaijan's updated motor vehicle corridors, which were included in the international TRACECA and North-South projects, is 1,915km. In the next 12-18 months the remaining over 400km of motorways will be brought up to world standards.

Significantly, in the past three years the construction and reconstruction of rural highways has been designated top priority for budget funding. The Transport Ministry's main attention today is concentrated on the reconstruction of 14,300km of secondary roads, and also 2,700 km of highways of republican importance.  However, this work commenced back in 2004 during the implementation of the first State Programme for the socio-economic development of the regions. And over the subsequent 7-8 years over 5,500 km of highways of all types have been built or reconstructed, with almost three quarters of the reconstructed roads being of republican and secondary importance.

"The total length of Azerbaijan's highways of all categories is about 20,000km. To rebuild them all AZN 30-35bn would have to be invested, and this work would take about 10-15 years," the chairman of the "Azeriyolservis" [Azeri Road Services] OJSC Cavid Qurbanov believes. Finding the money to reconstruct and then maintain all the country's roads in working order is a very complex task. Furthermore, it is extremely unlikely that such plans could be implemented from budget financing alone. Going by international experience, even the richest countries are unable to build and maintain by no means uncostly roads out of their state budget. Accordingly, in the majority of the developed states for more than half a century toll roads have been built and put into operation. Highways built by private companies or handed over to long-term control have been encountered for a long time mainly in North America and Europe, and in the 1970s and 1980s private roads began to appear in the dynamically developing region of Southeast Asia. Over the past decade the construction of toll roads has been taken up by other developing regions of the world, particularly the post-Soviet states, the Baltic countries and Russia.

The possibility of building toll roads in Azerbaijan was actively discussed at government level about six years ago. At the time experts of the Transport Ministry began drawing up the required statutory documents and preparing proposals for potential investors. However, with the onset of the global economic crisis, these projects had to be put on hold, and it was only recently that the relevant legislative base was adopted by parliament.

"The changes and amendments to the law 'On highways', approved by parliament, contributes to the modernization and expansion of the road network and will help to satisfy safety requirements, provide high-quality services to motorists, enable high speeds to be introduced and also create the preconditions for building toll roads in the country," the head of the parliamentary commission for economic policy, Ziyad Samadzada, said.

As it appears from the articles of the updated law, toll roads that comply with international standards and requirements can be created on the basis of state-owned republican and local roads and also general private roads, to the construction of which foreign investors could be attracted. However, the transfer of existing state-owned roads to toll roads is possible only if there is a non-toll road along the same route in the vicinity.

The updated law stipulates that a road toll may be applied if one is driving along the whole length of the highway or along a definite section, including bridges, tunnels and other engineering works. In that case the tariff will be determined by the relevant executive power bodies, depending on the category of highway. At the same time all transport of a defence nature, as well as vehicles designed for surveillance and ensuring public order, clearing up after emergency situations and special vehicles belonging to the police and the utility services and ambulances are exempt from payment of a road toll. For their part, the owners of private roads have been given the right to offer benefits for users and vehicles of various categories.

The only alternative

Among the sponsors of the construction of private roads in Azerbaijan is the Asian Development Bank (ADB), which has allocated $925,000 of technical aid to the development of toll road projects and the drawing up of a multi-instalment programme of funding (MFF) of Azerbaijan's municipal transport (Baku Sustainable Urban Transport Programme). The bank believes that by the end of this year a consultant engaged on the MFF programme will lay down the approaches and submit proposals for the development of toll roads in the country. Over a medium-term period the ADB plans to invest $300m in the implementation of a programme providing for the reconstruction of 2,800km of roads up to European standards. One of the bank's conditions is the need to overhaul the system of the maintenance and management of roads built from loans, and one option provides for the introduction of a system of fare collection by attracting a private management company. The bank has considerable experience in questions of the optimization of road construction and the operation of toll roads, having marketed such projects in South Korea and Malaysia, for example.

For some years now the Azerbai-jani Transport Ministry and its structural unit the "Azeriyolservis" OJSC have been studying various options for attracting private investors to the construction of highways and other engineering works. These also include a project for a road bridge across the Bay of Baku, which was drawn up about five years ago by the South Korean company Dongsung Engine-ering Co. Before that the Transport Ministry examined proposals by the American Bechtel Corporation on the construction of a National Trans-Azerbaijan Express Way (NEMTA) which was designed to run parallel with the Silk Road, spanning the Haciqabul-Georgian border stretch. The creation of such a highway would have helped cover the distance from Baku to the Georgian border in less than four hours, of course having to pay a toll for such an expressway.

And recently, as an option of the first toll road, consideration is being given to the construction of a third ring road from the suburb of Sahil in Qaradaq District to Sumqayit, which will help reduce the distance to 80km. It is quite possible that in the more distant perspective a new expressway, linking the capital with the international airport, may be chosen as a possible candidate for commercialization.

What benefits from the emergence of toll roads in Azerbaijan will be gained by the participants in the road-building movement? If we go by the experience of the countries of Europe and the USA, first and foremost this will be high speed, perfect road quality and broader service potential. In a number of regions of the world the top tier of the speed limit has been lifted on toll roads. The high quality of the roads and state-of-the-art restraint systems - road dividers with special panels which prevent the blinding of the oncoming driver, high-quality light-reflecting markings, multi-lanes, more petrol stations, shops and cafes, rest centres and conveniences - can also be included among the benefits of toll roads. Finally, the maintenance of such roads is the responsibility of private investors, and in the case with state-run toll roads will help to ease the burden on the budget. As an example one may quote Norway and Spain where, respectively, 32% and 46% of the whole budget for the maintenance of the nationwide road network comes from toll roads.