Since the Carmel Tunnels opened to traffic in December 2010, hundreds of millions of shekels have been transferred to the concessionaire to support toll reductions granted to vehicles. But despite these reductions, toll fees rose by 65%, as many Haifa commuters preferred to forego the shortcut through the tunnels, in order to save approximately NIS 900 per month.
In 1996 the state published a BOT (Build, Operate, Transfer) tender for the Carmel Tunnels project, which at the time was one of the largest and most complex infrastructure projects ever built in Israel. The following year, the concessionaire was selected to build, operate and maintain two sets of tunnels on Mount Carmel in Haifa, under the hills, from west to east and from east to west.
The tender was based on the public-private partnership model, where the state grants a concession to a private company to assume responsibility for providing public infrastructure, including financing, planning, construction, operation, and maintenance, according to pre-determined standards. Throughout the concession period, the concessionaire has the right to charge infrastructure users fees, as stipulated in the contract, in order to recover the cost of construction and maintenance, and make a profit.
Highways in Israel that were built in a similar manner include Route 6 and the Tel Aviv Fast Lane. In the coming years, express lines will be built in this way on Streets 2, 20 and 5. But according to the state comptroller’s report last November, no lessons have been learned on the subject to understand the strengths and weaknesses of this method.
A toll road with fees stipulated in the concession contract
During the planning of the project, many objections were heard about building the expressway, which would provide drivers with a suburban shortcut to bypass the city centre.
However, in December 2010, the tunnels were opened to traffic, and the Carmelton consortium, which received the concession to operate the tunnels until 2040, began operations through Netevi Hacarmel. Tunnels have made journey times for cars much shorter, and in recent years the benefits of the tunnels have also benefited bus passengers.
The tunnels operate as a toll road and the fees are specified in the concession contract. The State Comptroller’s report released this month includes estimates from the Accountant General that the cost of building the highway and tunnels is NIS 1.25 billion.
The fees are the same for all vehicles, and are updated once every three months, linked to the Consumer Price Index (CPI). As part of the agreements over the years, toll fees have also been raised several times, and various reductions have been offered. In 2016, a discount was given to light trucks up to 12 tons, but according to the report, no one at the government-owned Trans-Israel Highway Company, the road regulator, or in the Ministry of Transportation examined the effects of this discount. In 2018 and continuing until the end of this year, car fees were reduced.
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These reductions seem like a positive development for drivers who want to use the tunnels, but state coffers have funded these reductions. Thus, instead of drivers paying the toll if they choose to use the tunnel, all citizens subsidize the trip. The subsidy accumulated since 2018 reached 226 million shekels this year, and the discount on light trucks began even earlier.
In August, Haifa Mayor Yona Yahav called on government ministries to completely cancel the death toll. The Transportation Ministry supported the call, and Director-General Moshe Ben Zaken told the mayor that Transportation Minister Miri Regev also supported eliminating the fees, but that was under the Finance Ministry’s authority.
But industry sources described these demands as populist and impractical due to the high cost to state coffers of providing the subsidies, which would be paid by the entire public.
Despite all this, the death toll has risen over the years, despite subsidies and discounts. Drivers who use the two subway sections daily in both directions pay 40.60 shekels per day and 893.2 shekels per month, while the utilization of capacity even during peak hours does not exceed 77%.
In 2010, when the road opened, the cost of the trip (in 2024 prices) was 6.7 shekels, but this year it reached 11.1 shekels, an increase of 65%. A similar increase also applies to trucks and public vehicles.
The State Comptroller says that this increase is “despite reducing the tax and achieving the reduction specified in the annex to the concession agreement as of December 2017, which the state funded with hundreds of millions.” NIS.
“This real increase in fees stems from the fact that, in addition to being linked to the Consumer Price Index, the fees were updated three times in the first eight years of operation of the tunnels, from a base price of 5 shekels to 8 shekels. However, with the linkage to the consumer price index, the The rate of toll increase is higher than the rate of toll reduction and discount realization.
It was also found that from 2011 until the end of 2020, total implementation revenues exceeded implementation expenses by approximately 8 million shekels.
The State Comptroller notes that, based on projections, there will be a consistent surplus in revenues compared to expenditures throughout the entire concession period. Accordingly, the State Comptroller proposes to reduce the concessionaire’s compensation by 17%.
In the work of a traffic consultant from January 2023 for the Trans-Israel Highway, it is stated that tolls remain a major obstacle to increased tunnel use, especially outside peak hours, along with unused capacity on the road. However, there is no differential pricing for the trip, and it is expensive compared to other toll routes.
A January 2023 study by a traffic consultant for the Trans-Israel Highway Regulatory Authority stated that tolls remain a major barrier to increased tunnel use, especially outside peak hours, when there is significant unused capacity through the tunnels. However, there is no differential pricing for the trips, and they are expensive compared to other toll routes.
At the end of this year, the agreement on tariff cuts expires, and this will be an opportunity for government ministries to agree on another arrangement, according to which even if the country chooses to support the cuts down the road, they will not be swallowed up in the past. – Agreed price increases, and if capacity has not yet been exhausted, this is just another reason to add more public transportation services.
There was no response from Carmelton and the Trans-Israel Highway.
The Ministry of Finance said: “The volume of use of the Carmel Tunnels is high, and the infrastructure is being used relatively efficiently. With regard to reducing compensation rates and reimbursement of expenses to the concessionaire, the process of modernizing the Carmel Tunnel systems is underway.”
The Ministry of Transportation says: “The tunnel capacity is highly utilized during daily peak hours, allowing a good level of service. Its rate is high compared to non-toll roads in the area. Toll fees in the Carmel Tunnels in Haifa are determined by law and in accordance with an agreement Concession signed by the Accountant General of the Ministry of Finance.
Published by Globes, Israel Business News – en.globes.co.il – on November 20, 2024.
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