Nigeria Cabinet approves Federal Tolling Policy and Regulations

Nigeria Cabinet approves Federal Tolling Policy and Regulations

One of the highlights of today’s Federal Executive Council (FEC) Meeting (Wednesday, August 11, 2021) is the APPROVAL of a Federal Roads and Bridges Tolling Policy and Regulations. It has been undergoing development for a while now, and is now finally ready and has been approved by Cabinet.

According to the Minister of Works and Housing, Babatunde Fashola, SAN, briefing after the press after the Meeting, the Policy and accompanying Regulations were developed after extensive consultations with various Stakeholders within and outside the Government, including Transport Unions like NURTW, NARTO, RTEAN.

Also, a Willingness-To-Pay Survey was carried out, to arrive at the recommended pricing framework. The fees at existing tolled roads (Lagos and Abuja Airport Toll Plazas, and the Lekki and Ikoyi Toll Plazas) were also taken into consideration.

10 Highlights of the new Federal Tolling Policy, as shared by the Minister, are as follows:

1. It will be an Open Tolling system (just like the one that used to be in existence in the country), instead of a Closed Tolling system. (A Closed Tolling system means that you pay per distance traveled (‘distance-dependent’), while Open Tolling means you pay a fixed/flat rate that is not dependent on distance traveled)

2. Only dual carriageways owned by the Federal Government will be eligible for tolling by the Federal Government. (Of the 35,000km of Federal Roads in existence in the country, only 5,050km are dual carriageway). Federal carriageways that are single, i.e. undivided highways will not be tolled. The only exceptions here will be some bridges, which are listed in the Policy.

3. Toll Revenues will be used to maintain the roads and also to repay investors who have invested in building or completing a road under the Highway Development Management Initiative (HDMI).

4. Electronic Toll Collection and Management systems will be prioritized over Cash systems.

5. The following will be exempted from Tolling: Bicycles, Tricycles, Motorcycles, Diplomatic vehicles, Military and Paramilitary vehicles.

6. The Tolling Policy is a broad National framework that will serve as a guide for States and Local Governments who seek to implement their own Tolling Policies. (As noted earlier, only about 16% of the total road network in Nigeria belongs to the Federal Government. States own/control roughly the same amount as the FG, while the rest – amounting to two-thirds are last-mile roads belonging to and under the responsibility of Local Governments).

7. People who live around Toll Plaza Areas will benefit from what is called ‘Frequent User’ discounts, in line with global best practice.

8. Recommended Tolling Fees in the Approved Policy and Regulations are as follows:

Cars: N200

SUVs: N300

Private Buses: N300

Commercial Buses: N150

Luxury Buses and Trucks: N500

9. According to the Honorable Minister, the Federal Highways Act vests the power to toll (Federal Roads) in the Minister responsible for roads, but implementation of any tolling policy/regime involves many processes and multiple agencies, and therefore requires multi-stakeholder collaboration.

10. According to the Minister, it is important to stress that even with this policy now approved, tolling is not going to start immediately. He very clearly said that Tolling will not start “until the roads are motorable.” This policy is a necessary condition for the implementation of Tolling, and it is now for people to start getting familiar with it and for relevant stakeholders to start using it as a basis for their financial modeling and investment analysis, ahead of the eventual rollout of Toll Plazas.