International Development Finance

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  • Topic: Toll road, Road, Electronic toll collection
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  • Published : January 23, 2013
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COST AND QUALITY ISSUES IN ROAD CONCESSION CONTRACTS
P. Alexander, D.W. Burger, G. Esterhuysen, J.J. Smit and A. Taute

ABSTRACT
Road concession contracts provide one way of delivering roads that differ significantly from the more traditional means of designing and calling for state-funded conventional construction tenders. Concession contracts can provide some significant benefits over conventionally-funded construction projects but they also create their own unique set of problems that need to be dealt with to ensure value for money and a successful outcome for the user and sponsor. This paper provides some insight into the various problems and opportunities that are created by concession contracts. Several of these aspects are discussed in the context of the newly completed N4 Maputo corridor toll road and the contractual and quality issues that emerged during the initial construction phase of the project. The issues are put forward for debate and discussion with a view to providing input into future contracts and into the remaining operational period of some of the current concession contracts.

1. INTRODUCTION
Road concession contracts provide one way of delivering roads that differ significantly from the more traditional means of designing and calling for state-funded conventional construction tenders. Concession contracts can provide some significant benefits over conventionally-funded construction projects but they also create their own unique set of problems that need to be dealt with to ensure value for money and a successful outcome for the user and sponsor. This paper describes the process and experiences regarding toll road procurement and operation that were gained on the N4 Maputo corridor Toll Road concession. The paper reviews the entire process of documentation, tendering, tender evaluation, contract award and construction and operation of the project with a view towards providing material improvements for future projects of this nature. The various advantages and disadvantages of this form of procurement compared with the more traditional procurement of new roads through normal construction contracts are also highlighted.

2. N4 TOLL ROAD PROJECT
The N4 toll road project involves the improvement of, and operation and maintenance of 500km of highway between the Gauteng/Mpumalanga border and Maputo, funded through a 30-year toll road concession contract. The existing road consisted of some 73 kms of 4-lane dual carriageway freeway, 75 kms of 4 lane undivided and 350 kms 2-lane road. At the time of initiating the concession, Mozambique was in an early development phase following a protracted civil war. At the same time, the South African Government sought to foster development in the Mpumalanga province in order to alleviate poverty and create jobs. The concept of a spatial development initiative (SDI) was born and the intention was that the toll road would form a central part of the initiative in this area. The Governments of South Africa and Mozambique decided to rapidly develop the Maputo Corridor as an SDI and the respective Departments of Transport were requested to initiate the development of such a road within a very short timeframe. Proceedings of the 8th Conference on Asphalt Pavements for Southern Africa (CAPSA'04) ISBN Number: 1-920-01718-6 Proceedings produced by: Document Transformation Technologies cc

12 – 16 September 2004 Sun City, South Africa

8th CONFERENCE ON ASPHALT PAVEMENTS FOR SOUTHERN AFRICA

The concept of a single BOT road concession contract crossing a border and operating within two sovereign countries is highly unusual, and special measures needed to be put in place by South Africa and Mozambique governments to create a single “sponsor” or client body. The South African Department of Transport and the Department of Roads and Bridges (DNEP) in Mozambique, together with their respective Governments, entered into a Protocol Agreement in order to establish an...
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