Study of Shadow Toll Mechanism with the Experience of International Countries

Introduction

The United Kingdom pioneered the concept and practice of shadow tolls mechanism in 1990s through its implementation of the Private Finance Initiative (PFI). It is a strategic economic policy that authorized financing of public infrastructure projects to the private sector. In Europe the conventional Design, Built, Finance and Operate (DBFO) model of Public private partnership has taken the form of Shadow toll mechanism where the Per Vehicle amount paid to a Private Party from a sponsoring governmental entity and not by facility users. Shadow toll amounts paid to a facility operator would be based upon the number of vehicles using the road. It is a payment structure where the road user does not pay any toll.

Shadow tolls could be an element of highway toll finance where a private party is responsible to construct, operate and maintain the infrastructure over a concession period facility and receive periodic shadow toll payments from government agencies rather than motorists who use the road. The Funds for shadow tolls can come from government sources such as Public Road taxes & Fuel Taxes, Vehicle taxes. The shadow toll framework is summarized below in figure.

The Shadow tolls are annual payments to a private party over a concession period. In Shadow toll mechanism the private operators are responsible for Initial financing of projects rather than government sector. Shadow tolls are not a financing source but a payment approach which consist range of payment methods and viable financing structure that well fits with the needs and characteristics of certain projects. In general the public sector provides the incentive to the private party for timely completion of work as well as management.