Road network expanding: Case for National Highway Authority

Road experts have suggested various solutions to address the problems/bottlenecks. It is worth recalling here what Suleiman Hafez, the then Jordanian Minister of Finance, said at a seminar on 'Road Maintenance Financing' held in Amman on June 30, 1997. The key points that he stressed appear to be applicable in Bangladesh perspective as well. The points focused by the minister were as follows:
a. the establishment of a road fund should be part of a longer-term strategy to commercialise the road sector; it should not simply be a means of avoiding    strict budget disciplines;
b.  the road fund should be dedicated to maintenance; we must maintain what we have before we start to build anything new;
c. the road fund should be a purchaser, not a provider of services; it should be a separate agency with a clear mission-statement, transparent objectives, physical output indicators and  should ideally work within an envelope of total input costs;
d. road fund revenues should come only from road-user charges, not from any earmarked taxes; this would not prevent the government from tapping the road fund from the consolidated budget, but this would only be done on a discretionary basis;
e. the user-charges going into the road fund must not take revenues away from other sectors; there should  be a clear demarcation between the tax revenues, which belong to the consolidated budget, and the user-charges which belong to the road fund, and the only existing revenues which should go into the road fund must be confined to what is already allocated for roads through the annual budgeting process;
f. the road fund should be managed by a strong and independent management board/ authority  which should include private sector interests; both road users and the business community should be free from the influence of any vested interest groups;
g. management of the road fund should be handled by a secretariat and it should employ commercial accounting systems and have annual performance targets;
h. there should be a fair degree of cost recovery through the user charges; in the long term we want to have a road public utility which does not receive any government subsidy;
i. we cannot escape the fact that  fuel is a convenient tax handle from the point of  view of fiscal policy; that inevitably puts a burden on the road fund administration to explain to the public why all fuel price increases are not equal.
 The government of Bangladesh (government never changes, only management changes) may take the above points into consideration while launching the 'Road Maintenance Movement.'
Henry R. Kerali of the University of Birmingham, who was then World Bank consultant, took active part in the  International Workshop on Road Management and Financing (November 1998) at Dhaka. He presented a paper titled 'Key Elements in Restructuring Road Management'. He discussed the functional separation of Government and Administration and said: "Many countries have found it beneficial to separate the political role of government from the professional role of the road administration. This recognises that the role of government is to 'govern' and to frame overall policy for the road network, and that the role of a road administration is to administer and manage the network, making decisions based on professional considerations within the policy framework laid down by government."
The division of responsibilities between the government and road administration, as highlighted by Mr. Kerali, is presented in the following table:

EFFECTIVENESS AND EFFICIENCY: Institutions should normally strive to be both effective and efficient. Effectiveness measures the capability of an organisation to define, agree on, and meet appropriate operational objectives. Two prerequisites can be identified for increasing effectiveness and efficiency of an organisation. These are: specificity and competition.
Specificity: The first is to increase the specificity and focus of operations by working in a more business-like manner. This is normally referred as 'commercialisation' and includes such features as:
a. Identifying customers and introducing policies to ensure that customer requirements are met; b. Functional separation of roles, such as government and administration, client and supplier; c. Operating the organisation like a commercial business, including having financial autonomy, with delegated accountability for managerial decisions and actions; d. Introduction of appropriate management structures and operational procedures; e. Addressing human resource requirements, including employing sufficient (and only sufficient) staff with adequate skills; f. Improving access to information by implementing management systems in the areas of finance and accounting, road and bridge management, and personnel management;
Competition: The second is to introduce competition. This provides customers with choices that can improve the way their needs are met, and that compels providers to become more efficient and accountable. Competition provides a mechanism for enforcing standards of both organisations and staff. In addition to external competition from others, competitive pressure can be exerted on an organisation by the political establishment, regulatory agencies and by road users and by managerial measures that create a competitive atmosphere within the organisation. Thus, competition can be: a) external such as between private contractors bidding for construction work; b) internal as between different departments of an organisation, or c) mixed when a public sector organisation competes with organisations from the private sector as is now common in several Western European countries.
Kerali's conclusive views: The key issue is not whether the organisation concerned is in the public or private sector, but whether it operates in monopolistic or competitive environment. A parastatal or private body operating in a monopoly position has little incentive to perform better than a government organisation, and both can be much less accountable in terms of price and level of service. The key to effectiveness and efficiency is, therefore, competition, not privatisation.
TWO PROGRAMMES: The University of Birmingham in association with the World Bank (Department for International Development and International Road Federation) arranged in the late 1990s two programmes on 'Innovations in Road Management' and 'Road Fund Management'. A number of senior and mid-level RHD and some LGED engineers from Bangladesh participated in those programmes
 The reasons  for arranging this kind of programme was that the World Bank publications had highlighted the problems faced by many countries in maintaining their road networks for which large investments in their road infrastructure got eroded due to lack of adequate maintenance and were then faced with a choice of reconstructing large proportions of their networks or downgrading parts of the network to receive minimal maintenance. The World Bank reports showed that reconstruction would cost between $40-$45 billion world-wide, but it could have been avoided by spending $12 billion on timely maintenance. If the current trend continued, the eventual costs of reconstruction would increase by two to three times with a consequent increase in vehicle operating costs (VOC) several times more. There were various reasons for this poor state of affairs. Road authorities were not directly affected by road deterioration and, therefore, did not come under direct or immediate pressure. Road users were not sufficiently organised to apply public pressure on road authorities. The root causes of the problem had been identified as lack of adequate funding and lack of public accountability. In some countries, additional resources alone could not solve the problem of road deterioration. Institutional reform of the road sector was a prerequisite. The organisation, staffing, and the performance of the institution responsible for roads had to be improved.
REFORMS IN FOUR AREAS: However, since the vast majority of roads are a public monopoly, their commercialisation will require complementary reforms in four areas referred to as the four basic building-blocks as stated below:
(i) Creating ownership by involving road users in the management of roads in order to win public support for more funding, to control potential monopoly power and to constrain spending to what is affordable;
(ii) Stabilising road financing by securing an adequate and stable flow of funds;
(iii) Clarifying responsibility by clearly establishing the role of difference levels of management, and
(iv) Strengthening management of roads by providing effective system and procedures of management, as well as strengthening managerial accountability.
The Communication Minister visits different highways, personally inspects road repair and maintenance works  and at times exhorting RHD officials, bus and truck drivers, rickshaw-pullers and others to meticulously and efficiently perform their respective duties with appropriate attention. The minister's visits get intensified during the two Eids in particular. But the RHD is supposed to keep the roads, highways, bridges (designated), ferries, etc. in good condition not only during the two Eids but also throughout the 365 days in a year.
 In conclusion, the RHD, which was set up to continuously address road-related issues round the year, has been facing difficulties with the ever-expanding road-communication network.    Neighbouring countries like India and Pakistan have set up their respective National Highway Authority offices to address the problems and issues of important roads and highways effectively, efficiently and timely. We may seriously consider setting up such an Authority in Bangladesh with regard to construction of important national highways, ensuring their continuous repair and maintenance work.
The relevant government authorities should take cognizance of the findings and recommendations made by world-renowned road experts like Henry R. Kerali and Lan G Heggie. The government should find out a viable 'mechanism' for performance-based Repair and Maintenance of Roads, with constant and strong monitoring arrangement. The repair/maintenance work of roads should be transferred to the concerned road contractors (who have constructed those roads) for five to ten years as practised in India, Pakistan, Australia and a number of Latin American countries.
The writer is president, the Chartered Institute of Logistics &Transport (CILT),                      Bangladesh Council.                                                                           [email protected]