Ugandan roads: Public perception and opportunities

By Eng. Dr. Michael Moses Odongo

The current heavy rains, expected to last till December 2017, are heavily pelting the road network causing mudslides, embankment washouts, pavement submergence, bridge/culvert failures and other flood-related damages.

Connectivity in many areas, most especially in the mountainous Elgon/Ruwenzori slopes is impaired adversely disrupting travel plans. It is also disrupting planned road maintenance works for which Uganda Road Fund (URF) last month released sh75b to its maintenance implementing agencies to execute to December 2017.

The rains expose and exacerbate latent weakness in the network, especially those due to backlog of maintenance, which lately has depressed network performance indicators thus: average travel time has peaked at 2.02 min/km up from 1.83min/km in 2015; motorised traffic is a whopping 8,500 million veh-km from 3,755 million veh-km in 2003 for a non-expanding asset; loss to backlog is possibly 30% of road space; congestion in Kampala city has increased journey time from 2.4 min/km in 2014 to 2.9 min/km today; road fatalities still hoover around 3,500 persons per year, one of the highest in Africa. Exaggerated unit cost of infrastructure including roads causes a haemorrhage of about $300m per year through under-pricing of utilities and mismanagement of projects. The 2016 Commission of Inquiry into UNRA, reported value loss of up to sh4 trillion in seven years on account of abuse of resources. Not surprisingly, road user satisfaction survey (RUSS) result for 2016 released by Uganda Road Fund (URF) last July revealed a marked decline in satisfaction level, from 51.7% in 2015 to 45% in 2016, attributed to narrow, dusty, accident-prone, congested roads.

And yet massive investment of up to $4b in road infrastructure by the Government has occurred since 1986, in three distinct waves: $500m (approx.) invested in the period 1986-1996 to reclaim and render maintainable hither "lost roads"; $1.5b under first Road Sector Development Program (RSDP) in the period 1996-2006 to upgrade major corridors and reform road management, financing and institutions; $2.28b RSDP2 from 2006 to date to operationalise new institutions notably UNRA and URF, increase paved roads to nearly 4,500Km from 1,800km in 1992. Lately up to $50.0m per year is being invested in urban roads including in KCCA, municipalities and town councils. Recent re-invigoration of force accounts approach to road maintenance to cut losses associated with tendered works in districts has seen procurement of $153m worth of road equipment.

Technological, economic and demographic factors are conspiring to dampen the impact of these interventions into the condition of the network hence need for a re-think of modernisation schemes to address capacity constraints of the network and restore public confidence in the asset. Wider roads, albeit costly due to expensive land acquisition, is needed to accommodate the 8,500 million veh-km annually plying the roads, particularly to segregate traffic, enhance safety and reduced journey times. The urban population is increasing at 5.43% per annum and expected to grow from six million people in 2013 to over 20 million people in 2040. This will require additional road space back to back with mass rapid transport system on pothole-free well-signalised urban networks to reduce congestion. The futuristic plan announced by UNRA recently to construct up to four expressways radiating from Kampala city (Jinja, Nakasero-Northern Bypass, Kampala Outer Beltway and Kampala-Busunju-Hoima) in addition to that to Entebbe (nearing completion) is a step in the right direction in this respect. Dust and mud slurry in urban areas must be eliminated through purposeful paving of roads and open spaces.

A resilient network capable of withstanding elemental forces will require stronger pavements (e.g. continuously reinforced concrete pavement, CRCP), long-span high capacity bridges (suspension or cable stayed), elevated roads and interchanges, underground road/rail network in Kampala and other aspects of modernisation. The Big seven bridges i.e. Karuma, Pakwach, Jinja, Awoja, Katonga, Katunguru and Manafa are so vital to national life that they must be upgraded to higher signature forms and parallel alternatives established (as is happening at Jinja) to minimise losses to the national economy from their sudden collapse. From an engineering perspective, the Luzira-City Square-Wandegeya-Bwaise corridor in Kampala city is ripe for an underground tunnel transportation system. Recent advances in tunnelling technology (rotary drilling combined with ultra-sonic drill which pulverise rock with high frequency sound waves and greater automation guided by ground penetration radar) is tumbling cost of tunnelling greatly making it a feasible option for Uganda at some point. 

Road modernisation implies upgrading roads to suit new advances in motor vehicle technology as well, notably electrical and autonomous vehicles, which are now becoming reality in many countries. Technology is advancing to place roads as an important source of electricity from heat trapped in black tar surfacing material and from mechanical movement of vehicles. This could be an important energy source for creating smart junctions as well as charging electric car batteries, leave alone extra power to the national grid. Modernisation must prepare roads for these technologically driven functions.

Translated into road programmes and project, modernisation implies huge capital-heavy investments well beyond the current annual sh3 trillion per year that the national coffer is providing. Normal taxation alone is not able to finance these aspirations given competing investment needs in related infrastructure i.e. standard gauge railway, oil pipeline and refinery and hydropower dams that shall lock up huge infrastructure funds over the next decade. There is the option of government bond but from international experience, yields are unattractively low for road investment. 

Worldwide, about $2.5 tr is spent on infrastructure which according to McKinsey Global Institute still falls short of the $3.3tr annually required to 2030 to plug world infrastructure deficit. China, the world's biggest infrastructure spender invests almost 9% of its GDP on infrastructure while South Africa is at about 4.8%. India is spending about $30b per year on roads and rails and for this train speeds have increased from 50 kph a decade ago to some 140kph today while its boast the world's tallest bridge at 359m above a gorge over the Brahmaputra River. Uganda is very much in this trend with its $11.o0b infrastructure investment plan focusing on transportation and electricity generation expected to require well over 4.5% of its GDP for the next 10 years to 2027. There is already a reported infrastructure-financing gap of $0.4b per year.

Public Private Partnership (PPP) has great potential to plug this gap while offering benefits that include innovation and efficiency of private sector firms.   Uganda passed a PPP law in 2015. Records show that to date a paltry $1.83b has so far been invested through PPP mostly in the energy sector with little trickling to roads. Obviously there is much yet to be done to attract private financing to roads to achieve some aspects of modernisation described herein. Foreign capital seems to offer great allure for institutions shopping for PPP but domestically the pension fund, for example, has great stock of capital estimated at sh4.0 trillion looking for safe investment asset that offer stable inflation plus return to provide income promised to retirees. Such pension fund can either develop infrastructure investment know-how internally or they can use specialist fund managers to accurately appraise road investment projects.

PPP typically works best where risks have been identified and appropriately assigned and there is a stream of revenues from fees, road tolls, airport charges or utility bills without the need for public subsidy. Accordingly, projects must be subjected to detailed environmental and risk assessment, known as project grooming, before let out to private capital. India made an exuberant rush for PPP projects a decade ago that skewed so many risks against private firms leadings to nearly $200m of non-performing loans related to infrastructure investments. And $6.2b PPP fund started in 2015 is yet to find an investor. Australia has experimented with asset leasing, the central idea of which is to lease one piece of an infrastructure, such as a toll road to investors and spend the money earned on new roads. This is also not without pitfalls as Indiana state in the US found out in 2006 when it sold a lease on a 157 mile toll road at $3.8b but the private firm which bought the rights went bankrupt in 2014 because of overpaying for the toll rights. On the other hand, Chicago leased out its parking meters to a consortium for 75 years for $1.2b a price that turned out too low.

Properly nurtured, PPP has the potential to raise the required $6b (approx.) that Uganda needs for its road infrastructure investment needs over the next five years to address the aspiration of road users as determined from the RUSS survey. There is the intricate detail of precisely balancing public sector needs and private sector capital for a PPP to work well. Helpfully for Ugandan roads, 56.8% of respondents in the RUSS survey expressed willingness to pay such road usage fees and that is the starting point on harnessing PPP to achieve road modernisation programme for Uganda.

Turning to road maintenance, there is the ever-urgent need to effectively protect the investment in road development with a well-financed maintenance regime. The PPP has great potential to meet the road maintenance needs of the country through output and performance-based schemes that involve long-term contracting/outsourcing maintenance to private partner. Of the sh3.3 trillion annual budget, sh417b is provided for maintenance, well below the required sh800 to sh1000b requirement for such long-term maintenance commitments. Uganda set its priority right in 2008 to start a 2G road fund to assure predictable financing for maintenance of public roads but the Fund is yet to assume its full mandate of harnessing road user charges to finance road maintenance owing to residual lacuna in the law that set it up. It is still dependent on (stagnant) treasury remittance, as a source of revenue, hence cannot yet fully meet road infrastructure maintenance needs.

A 2G Fund should harness road user resources from applicable road use charging instruments and deploy proceeds to road maintenance. Operationally, it entails the Minister for Finance declaring levies on applicable instruments during the reading of the national budget. For petroleum products the levy is a percentage over and above the normal excise duty on each litre. In no way does it involve diversion of excise duty taxation from financing normal government work. The collection agent is Uganda Revenue Authority (URA) under a performance agreement with the Fund. Proceeds are banked on an independent URF account monthly. The monies are disbursed to implementing agencies as when they requisition and funds so disbursed do not go back to Treasury at the end of the financial year. Thanks to the lacuna between the URF and URA laws, this scenario has not yet been possible putting into peril the sustainability of the recently upgraded roads that require well-funded maintenance regime for longevity.

While Uganda has so far dilly-dallied with operationalising URF as a 2G Fund, technological advances in transportation are challenging the traditional approach to the fee-for-service principle underpinning road funds. There are environmental concerns calling for de-fossilisation of road transport. For most road funds that are operating on 2G principles, petroleum fuels have been a major source of revenue, sometimes constituting well over 80% of the revenue stream as reported by some member countries of the African Road Maintenance Fund Association (ARMFA). But car fuel efficiencies over the last 25 years have doubled leading to drastic reduction in fuel-based duties. The UK, for example, experienced a reduction of up to £813m per year over the last five years to 2017 yet mileage driven increased. A further pressure is being exerted by emergence of electric cars. Volvo carmaker has announced plans backed by $700m investment to have hybrid electric/internal combustion engines by 2020 and completely eliminate the latter by 2030. Other car manufactures may follow suit given the strong wave of green movement spurred on by the desire to combat global warming.

Road funds, therefore, have to rethink the road usage charging approach as they seek greater predictability in road maintenance financing. A strong option is to scrap duties on fuel and other road user charge instruments such as allowed in s.21 of the URF Act and replace them with a per mile road pricing scheme appropriately levied based on a car's weight and emission. Technology being adopted by most car makers now makes this road-pricing scheme a reality; transponders hither to tried in many countries to operationalise the scheme are now giving way to internet using mobile phone networks and GPS technology to permanently track the use of a car. Singapore plans to take this road pricing scheme a notch higher by using GPS to vary the amount drivers pay based on distance, time, location and vehicle type. London City markedly reduced congestion by introducing a Congestion Charging Zone (CCZ) five years ago where motorist pay up to £11.5 to enter the CCZ. It has lately seen a return of congestion with city journey speeds reducing from 32kmph to 28.5kmph, owing to rigidity in the system it adopted. In Oregon USA, drivers have devices fitted in their cars that take data from engine computers on fuel use, distance driven and link to central servers via phone network to charge US cents 15 per mile of road length driven. It is also considering a Singapore-like variable road-pricing scheme to ration usage of scarce road space especially at peak hours.

It is now time to plan and launch the fourth wave of major road investment round themed on modernisation of infrastructure to suit the roads to emerging technological, economic and demographic challenges discussed herein. There should be a strong reliance on PPP schemes to supplement normal government spending and infuse strong market efficiencies in infrastructure funding. Under this approach government spending is directed to low volume rural/community roads more in fulfilment of its social obligation. This would be a huge contribution to Uganda's aspiration to transcend to medium income status in the coming decades. 

The writer is the executive director of the Uganda Road Fund and chairman of the Engineers' Registration Board