Northern Bulgaria is Hostage to the New Toll System
9 months ago, when the first version of the tariff for the new toll system was published, we commented in detail what the expected revenue would be for the state, what would be negotiated and why the government would be forced to make concessions. Today there is already an agreement which confirmed out expectations for the reduction of fees, but at the same time raises two important questions - will there be enough revenue and whether there will be another discussion this year about a new tariff update?
There are two major changes to the new tariff - one is the smaller scope of the toll system and the other is the reduction of fees. The change in scope was anticipated as the initial proposal covered about half of the republican road network - 10,800 km. from the road network, including second and third-class roads. Although some roads were predicted to be zero rate due to poor condition, the range was still too big. The new proposal is for the system to cover 3,100 km, such as highways and first-class roads. It is important to note that this was reflected in the state budget for 2020, with pledged revenues (BGN 450 million in 2020) being exactly within that type of scope of the system.
However, this is not the case with the tariff. The proposed toll taxes have undergone several changes, with the government backing down in the last option and simply accepting the industry’s proposal. The new taxes range from 3 to 20 cents per kilometre, depending on the size and environmental category of the vehicle. In the original version of the tariff, the taxes ranged from 8 to nearly 90 cents per kilometre. For the largest commercial vehicles (3.5 to 12 tonnes) the reduction is within 2.6 times - from 7.8 to 3 cents per kilometre for Euro 6 and from 15.6 to 6 cents per kilometre for Euro 1 and 2. For the heaviest trucks (over 12 tons and 4+ axes) the reduction is more than 4 times - a heavy truck with the highest Euro standard (Euro 6) under the new system will pay 11 cents per kilometre, while in the first version it would have to pay 45 pennies per kilometre.
The original version of the toll system projected BGN 1.3 billion in revenue. With at least double or even triple the scope and reduced tariffs within 2.6 to 4 times depending on the vehicle, the pledged BGN 450 million in the 2020 budget seems difficult to achieve. It is no coincidence that the ministry announced that after three months of commercial operation of the system, if the revenues are lagging behind the budgeted BGN 450 million, the tariffs will be updated. This is very likely to happen, meaning there will be new tensions between carriers and the government in the summer.
It is clear that the government's leading line now is for the system to start working without any further delay – even with the tariffs proposed by the industry, since investments in road infrastructure are already dependent on the expected revenue. Once the system is up and running, pressure could be used to expand and increase tariffs. Preparations for this are in place - even in the last proposal, for example, there are second-class roads, even with zero taxes, and the State Budget Act 2020 states that "in the coming years the plan is to extend the scope of the toll system and to cover second-class roads as well." In short, the long-term push will be for a broader scope of the system and an attempt to update the tariff, and the corresponding tension in the sector can be expected in the coming summer.
Northern Bulgaria will be held hostage to the new toll system and expected revenues more than other regions. The government's strategic infrastructure projects include the Vidin-Botevgrad express road, the completion of the Hemus highway, the Gabrovo perimeter and the Shipka tunnel, the Ruse-Veliko Turnovo highway and the Black Sea highway. These are projects that cover the whole of Northern Bulgaria and provide connectivity between the economic centres in the north as well as better connectivity with the southern industrial zones. If the toll system fails to meet the revenue targets, some of the investment in road infrastructure in the north may be delayed.