Far Eastern Electronic Toll Collection Co. signed a 20-year contract for Taiwan's nationwide ETC system as part of a consortium including the Far East Group, the Swiss-based FELA Electronics Group and the Austria-based Efkon AG group.
This contract became a controversial issue in last December's local elections as a DPP county magistrate candidate charged that a magistrate candidate and legislator of the opposition Kuomintang was charged with being involved in a conflict of interest. However, there were no further developments on this case.
In any event, the initial results of a 10-day test run of the ETC system on the Second North South Expressway which began January 16 exposed numerous problems with the system.
Drivers with the pre-installed ETC units were able to drive through the special ETC lane and have their tolls automatically discounted from value storage cards without stopping.
However, drivers with the pre-installed on-board ETC units frequently drove through the wrong lane, while numerous cars without ETC units went through the ETC lane.
Moreover, the number of ETC users was relatively low. In the first eight hours of use, only 32 automobiles equipped with the proper equipment drove through the ETC lane, compared to the daily average of over 45,000.
Problems to be expected
However, even though there were numerous complaints and conflicts, the National Highway Bureau of the Ministry of Transportation and Communications and FarEasttone stated that "these situations were all expected and the test run of the ETC system will not be discontinued" and affirmed that as soon as drivers become accustomed to the new system, its overall efficiency will improve.
However, the number of automobiles that have mistakenly used the ETC lane was high and it is difficult to blame such a high rate of error on mere lack of publicity or infrequent freeway signs.
Another problem is the high cost of the ETC system which leaves the public feeling the operators are fleecing people. For example, the ETC system features stored value cards, but offers no discount on tolls and also requires the charge of a NT$7 per use service charge. If 100 toll charges are used as a standard, using the ETC will cost NT$156 more than buying tickets.
At the same time, the deposit of NT$200 for the needed IC card is also expensive compared to the NT$100 "Easy Card" used in the Taipei City mass transit system. Even stranger, returning the ETC IC card requires a service charge of NT$50.
Based on an internal analysis of the the cost of production of the "on board unit" made by Unity Opto Technology Co, each OBU only costs NT$996 to manufacturer, but the special MOTC report lists a cost of NT$1,260, a difference of NT$230.
Although this price was later reduced to NT$1,180 and will be sold at NT$680 for the first 200,000 buyers, the regular price remains significantly higher than the cost of production with a reasonable profit.
The MOTC report can be suspected of a certain degree of trickery and adds many items that were not originally in the package, including a battery cover and code installation fees.
Not surprisingly, an unofficial petition to boycott the system is being circulated on the Internet and in online forums charging that Far Eastern was stripping consumers of their money when it was supposed to provide a system that would benefit them.
Based on the initial content of the business plan, the ETC system was not supposed to add any fiscal burden to drivers, but this clause has clearly not been respected by the commercial operating consortium. Based on the contract, the date for the official inauguration of the ETC system was supposed to be determined by the National Highway Bureau, but FarEasttone unilaterally announced that the system will officially be implemented on February 10 with one lane for large vehicles and one for compacts at all toll stations on Taiwan's two major North-South expressways.
Deadline open to question
The suitability of this deadline is open to question. For example, only a few thousand cars have installed OBUs so far, but for the convenience of these automobiles, ordinary drivers have been expelled from two lanes in the Second North-South Expressway's toll stations.
In addition, the "build-operate-transfer" contract contains an unclear mandate for a fixed rate of return to the public sector of the tolls and other vague language that appear to grant the operating consortium the power to control and perhaps manipulate the operation of the system.
The worst possibility may well be that there is never a profit, so that the expected rate of return for the public sector will become a "pie in the sky."
Appropriate use of new technology to improve the quality of life is a sign of social progress. The public sector naturally has a desire to improve the efficiency of toll collection and ease bottlenecks on heavily used expressways and should be encouraged for having the resolve to engage in these reform measures.
However, if the public sector agencies do not do their advance homework well, simply having boldness will not be enough and they may well inappropriately accommodate the demands of commercial interests.
The MOTC had considerable resources at its disposal, including technical personnel and lawyers, to ensure that the public's interests were given top priority and that the scope of expected risks from "bugs" in the system could have been reduced to a minimum and mechanisms incorporated in the contract for suitable compensation and legal protection.
The question of the opening of the Hsuehshan Tunnel, the last link in the Taipei-Yilan (Peiyi) Expressway is similar. The opening of the tunnel for full traffic, whenever that takes place, will not entirely represent that the government's policy was correct. The greatest concern is whether a tragic accident takes place due to inadequate safety.
Public agencies need to intensify management and monitoring over BOT cases if they are to manifest the expected benefits for both private investors and the public.