The world’s largest scheme is a clear example of how not to introduce road pricing

Date: Thursday December 1, 2016

One year ago, despite a seemingly impossible time frame, protests from hauliers, physical and cyber-attacks and numerous last minute alterations to the fee structure, the world’s largest satellite based tolling project began. On 15th November 2015, the Russian Federal Road Agency (FRA) and its state owned partner, RT-Invest, launched Platon; a GNSS open road tolling network for HGVs (>12 tonnes) spanning more than 51,000km. The system incorporates both GPS and Glonass positioning within a single OBU. Disappointingly however, no other protocols are supported by the device and there is no interoperability with the existing DSRC tolling concessions operated by Avtodor and the FRA. To date, 774,000 HGVs have registered with the scheme. It is claimed that a full 570,000 of these are equipped with the Platon OBU – a figure only exceeded by Germany’s 12-year old LKW MAUT. Initial plans to attach a deposit of roughly €120 for the device were scrapped shortly after the start of the programme. Equally, a full 90% of HGVs operating in Russia are said to be domestically owned. Both points help to explain the high rate of OBUs.

Unlike the doomed French écotaxe, the FRA and RT-Invest did not allow for the provision of any additional services. Use of third party devices, which even Germany’s LKW MAUT is soon likely to allow, is also not possible. This unfortunate situation shows very little sign of changing. While holders of a DKV, E100 or Berlio fuel card are able to pay for their tolls in Russia, the 200,000 drivers without a certified OBU have no other means of electronic payment and are instead reliant on manual payment via one of the 149,000 terminals positioned across Russia’s vast expanse.

With an initially proposed fee of RUB3.73 (€0.05) per km, it was said Platon would generate more than RUB50 billion (€727 million) per year. This was quickly hailed by transport chiefs as the solution Russia desperately needed to fix the country’s crumbling road infrastructure. To put the charge in context, the average cost per km across Germany is €0.15 and €0.12 for Belgium’s Viapass.

Following the necessary compromise with a clearly unhappy road transport industry, a reduced rate of RUB1.53 (€0.02) was agreed. This led to a revised target of RUB20 billion (€290 million) for the year. As we can see in the attached graph, this target has not been met. RT-Invest’s agreed annual remuneration of RUB10.6 billion (€154 million) however, has not changed, putting operational costs at an eye wateringly high 60%. Facing sustained pressure and continued sporadic protests, the Ministry of Economic Development has proposed to leave the rate at 1.53 RUB until 1 January 2019. Good news for fleet operators and truck drivers, bad news for investment in new roads.

First year revenue has been below even revised expectations

To plug the gap in expected revenues, the Federal government is considering plans to extend Platon beyond the main highways to cover the regional road network as well. A Bill has already been submitted to the federal Duma and has the strong support of Transport Minister Maksim Sokolov, who has repeatedly expressed his frustration at the amount of resistance to Platon. Nonetheless, concerns remain that any extension of the scheme to new roads and lighter trucks could spark similar levels of protest and violence as those seen in the Winter of 2015. The government is likely to press ahead regardless.

It is estimated that an increase in the per km fee to RUB3.03 (€0.04) would increase road transport costs by 5%. This is of particular sensitivity to the Russian haulage industry as profit margins are typically fairly low at between 5 – 7%. However, these figures ignore the significant benefits of better quality roads, higher vehicle uptime and reduced congestion.

Adapting to any new pricing regime requires flexibility on the part of the fleet operator. One can’t help but feel frustrated when public authorities do not adopt the same approach. As Hungary’s Hu-Go has demonstrated, enabling road pricing with an existing technology – in their case the fleet telematics system – can help to enable seamless harmonisation of multiple services both in the cab and in the back office. This also helps to position road pricing as a service, rather than a standalone charge. For fleets without an existing telematics platform, the Russian authorities have missed a huge opportunity to position Platon as the host for such services. With a GPS/Glonas capable device, Platon could easily integrate additional features such as vehicle track & trace, geo-located breakdown assistance, mileage logging or even basic usage-based insurance.

With a firm commitment from Government and we-established base of devices in use, the world’s largest tolling scheme is here to stay. One can’t help think however, that by choosing a standalone device incompatible with other services the Russian Government has missed the opportunity to introduce road pricing in a way which would have generated clear value for fleet operators. Sadly, they are far from alone in this respect.