For many years the fast lane on the western end of the Jerusalem - Tel Aviv highways (Road 1) has been considered a dizzying success. So much so that the model of the fast lane is currently being replicated on two other highways: on the coastal highway (Road 2) from Shefayim to Tel Aviv and on the Ayalon Highway (Road 20) from Rishon Lezion to Tel Aviv. In the future a fast lane will also be built on Road 5 into Tel Aviv. According to the innovative fast lane model, tolls are set by a dynamic algorithm according to congestion.
The fast lane on Road 1 stretches from Ben Gurion airport, via a shuttle bus station at the Shappirim Interchange to Kibbutz Galuyot Interchange at the entrance to Tel Aviv. The fast lane was opened in January 2011 as a toll road, which aimed to ease congestion at the entrance to Tel Aviv. It is used by buses, cars with multiple passengers, and cars that pay a toll and guarantees a minimum speed of 70 kilometers per hour. The more congested Road 1 becomes the higher the toll - ranging from a minimum of NIS 8 to a maximum NIS 119.
Near the Shappirim Interchange there is a car park with 2,000 spaces and recently 1,750 more spaces were added. From the car park, commuters can board free shuttle buses to business centers in Tel Aviv and Ramat Gan. Over the past year, cars paying the toll comprises 73% of the traffic on the fast lane.
The BOT model on which the fast lane was built was also considered innovative at the time. Under this model, the state granted a concession to a private company to finance, plan, build, operate and maintain the infrastructure according to pre-defined criteria. The concessionaire has the right to charge tolls to those using the infrastructure to recoup its costs and generate a profit.
Construction: NIS 500 million
The Road 1 fast lane concessionaire is Hanativ Hamahir, a subsidiary of Shapir Engineering (TASE: SPEN). The concession is for 30 years from 2007, of which two and a half years was for construction, which the Ministry of Finance Accountant General estimated would cost NIS 500 million.
But figures published by the State Comptroller’s latest report will cool the enthusiasm for fast lanes and call into question the success of the project. The data follows professional criticism leveled at the project by transport and urban planning experts, who have argued over the years that the fast lanes contradict the stated goals of the Ministry of Transport, to reduce use of cars and promote public transport.
These projects, it is argued, expand roads and require huge parking lots, instead of planning rail projects and financing service additions to bus lines. All this when only about one in a thousand people entering Tel Aviv and Ramat Gan will use shuttle buses instead of cars while traffic jams will worsen, and infrastructure for cars will never meet demand, especially due to the rapid population growth in Israel.
Data in the State Comptroller's report reveals that while the construction cost was indeed NIS 500 million, the real cost of the project is much higher. Under the concession agreement, there is a safety net, in which the state shares the uncertainty with the concessionaire. The contract sets an annual revenue target, and each year the target is compared with actual revenue, and if revenue is below the target, the state pays the concessionaire a percentage of the deficit, and vice versa.
The data shows the revenue target has not been achieved in recent years, and the state has been financing the concessionaire. This means that not only are road users financing their fast travel, but the entire public, is subsidizing the fast lane, contradicting the project's stated economic model. The subsidy costs hundreds of millions of shekels. The report only presents figures from 2019, and by 2023 subsidies had reached about NIS 170 million. This constitutes nearly half the amount the state subsidized for all toll roads in these years (NIS 363 million). The Ministry of Finance has rejected criticism, noting that the reduction of risk by a safety net is reflected in a lower price offer, and that toll is determined by the government and approved by the Knesset, and there may be situations in which the state does indeed subsidize journeys.
In addition, the expansion of the parking lot cost NIS 325 million, and following it, a new agreement was signed with the concessionaire, based on the assumption that the number of users of the lane would decrease following the increase in the number of parking lots, because more people would get on shuttle buses and not pay as drivers. Therefore, it was decided to quantify the loss of revenue by comparing the revenue that the concessionaire would have expected, if not for the parking lot expansion, and the revenue to which it would be entitled after its implementation.
Abandoning the shuttles
Despite the assumptions in the agreement, the actual situation is completely different. The number of journeys were 5.3% lower in 2023 than in 2019. The Trans-Israel Co., which oversees toll roads, claims this was due to the war which began in October 2023, but even in 2022 the number of journeys was 0.6% down on 2019. Did these passengers switch to shuttles? The data actually show that commuters abandoned the shuttle buses en masse.
In September 2023, Trans-Israel conducted a satisfaction survey due to the sharp decline in passenger numbers on the shuttle buses despite expansion of the parking lot. When the survey was conducted, 1,036 passengers traveled on a daily average on the line to Kaplan Street and 665 passengers on the line to the Ramat Gan Diamond Exchange. For comparison, over 1,000 passengers board one train. The data indicated that there was a decline of 34% compared with the number of passengers in 2016.
According to the State Comptroller’s report, the concession agreement allows for the operation of only three shuttles, although more may be required, and Trans-Israel does not have data on the needs in the field, nor has a professional and detailed survey been conducted on the subject. Various steps were also recommended, such as raising public awareness of the service and increasing frequency. However, these findings are no different from studies conducted in the past, and indicated that a shuttle bus cannot be as attractive as a regular and reliable public transport service. Before the road was built, environmental rights group Adam Teva V’Din filed an objection, proposing construction of the road and parking lot be contingent on a railway station at Shafririm. The objection was dismissed and the station was not built.
The public participates in the financing
So with the number of people using the fast lane and the shuttle buses on the decline, the public must subsidize the project by hundreds of thousands of shekels. The promised contribution to alleviating congestion in Tel Aviv is also not noticeable, with only a few hundred people using the shuttle buses, while one million cars drive along the Ayalon highway every day.
Meanwhile, next year the fast lanes into Tel Aviv from Shefayim in the north and Rishon Lezion in the south is supposed to be expanded in a similar way through a private sector concession. It is not yet clear what the ministries may learned from the data from the fast lane on Road 1 ahead of implementing the next projects.
The Ministry of Transport said, "Contrary to what is claimed, the number of journeys on the fast lane returned to normal after the Covid pandemic, which caused less travel, among other things, due to lockdowns. Shortly afterwards, other influence have been felt including the outbreak of the war."
"The project is very successful, and has resulted in many traveling to Gush Dan choosing to park in the parking lot and use the shuttle lines, thereby saving considerable costs for both users and the economy. As part of the 'Fast Lanes' project, many lessons learned from the Shappirim concession have been implemented."
The Ministry of Finance said, "The park-and-ride complexes promoted by the Ministries of Finance and Transport are designed to facilitate access to Gush Dan. In the new projects on Roads 2 and 5, stress has been placed on connectivity to existing bus lines, railway stations and bicycle paths. The state, in cooperation with Trans-Israel Company and Tel Aviv Municipality, are working to improve the shuttle lines so that they will serve a wider population."
Shapir Engineering said, "It is important to note that the concessionaire did not 'receive' anything from the state, but rather built the project at its own expense, and at the best price, built a significant addition to the parking lot, operates additional shuttle lines with a significant financial investment, and the public will benefit and will benefit from an upgraded asset that will serve it for decades. Thousands of drivers a day choose to leave their vehicles in the parking lot."
Published by Globes, Israel business news - en.globes.co.il - on November 20, 2024.
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