Plato Is Invincible, or, The Fix Is In for RTITS

trans-siberian highway0

Russian Government Could Pay for Protests Against Plato Road Tolls System
Olga Adamchuk
Vedomosti
January 8, 2019

“No to Rotenberg’s extortion” read stickers on long-haul trucks in early 2017, when highways were blocked [sic] in protest against the introduction of the Plato road tolls system. An agreement that would establish an automated weight-and-size monitoring system on federal highways, fining overweight trucks, would protect its likely operator,  RT Invest Transport Systems (RTITS) from problems associated with such manifestations of dissent.

Currently, RTITS is 23.5% owned by Igor Rotenberg [son of Putin crony Arkady Rotenberg], 50% by RT Invest,  19% by Andrei Shipelov, and 7.5% by Anton Zamkov.

If there are rallies, demonstrations, meetings, and marches near the automated weight-and-size monitoring points, even if these events were authorized, and they hindered the construction or operation of the Plato system, incurring extra costs to the operator, the Russian government would be obliged to compensate the operator for these expenses, according to a draft concessionary agreement, published December 28 on the official Russian government bidding information website torgi.gov.ru. The operator would be able to bill the government not only for actually incurred losses but also for expected losses.

The government will wait for other bids until February 12. If other bids are submitted, there will be a tender for the contract. If there are no bids, the agreement will be signed on the current terms.

However, downtime in the operation of the scales will have no effect on the operator’s revenues, which will be supplied not by Russian truckers, but by the Russian government. For installing and maintaining the system, the operator will be paid 8.64 billion rubles annually [approx. $129 million] (VAT not included) over eleven and a half years. The government will shell out a total of 118.45 billion rubles [approx. $1.7 billion] (VAT included) to the system’s operator. The concessionaire would pay fines for the glitches for which it was responsible. An appendix to the agreement stipulates the system must identify three quarters of violators.

The agreement features a long list of special circumstances in which the operator can demand additional payments from the government, including when inflation is twice as high as was expected, and if the project goes over budget by ten percent or more.

The government would also permit the system’s operator to use the property it builds and installs, which remains state property, for any purpose, including commercial ends.

A concession deals insider notes this stipulation has usually not been part of projects in which the grantor made payments to the concessionaire, since, if there were an opportunity to earn money, it should reduce the fee paid by the grantor. The agreement also lacks the routine stipulation that key subcontractors must be approved by the grantor. Our source wondered why the government was thus willing to forfeit oversight of the project. If the concessionaire had managed to obtain cheap financing, the government could reduce its fee: the state and investors would usually share benefits equally, but there is nothing of the sort in the proposed agreement.

Currently, there are 28 weight-and-size monitoring points operating on Russian federal highways. After the new system has been completely installed, in 2024, there will be 387 automated weigh stations. Under the terms of the project application, eighty-eight of these weigh stations will be built by way of improving the current Plato road toll system, the Russian Transport Ministry has reported.

Investors are also protected in case the agreement is terminated. The Russian government shoulders a greater payout to the concessionaire than it would in similar agreements, said Sergei Luzan, director of PricewaterhouseCoopers Russia (PwC Russia). Even if the project never gets off the ground, the concessionaire can incur two billion rubles in expenses and have them repaid by the Russian government. Such conditions are possible in concessions, but the government usually only pays costs that have been itemized and authorized in advance, and at a discounted rate, Luzan said.

In 2017, protesters demanded the government terminate the concession agreement for the Plato road toll payment system. Andrei Bazhutin, [chair of the Association of Russian Carriers or OPR], said truckers were planning to protest the launch of the weight-and-size monitoring system as early as February. According to Bazhutin, Russia’s independent truckers had been engaged in serious discussions.

Alexander Kotov, chair of the Truck Drivers Trade Union, also confirmed discussions were underway, but he refused to say when protests could begin. He said carriers would like to see shippers bear the cost for overloaded vehicles.

Having to pay for an overloaded vehicle that travels through several weigh stations could simply ruin a small trucking company, but it would also go bust if it refused to dispatch the overweight vehicle, explained the head of a major logistics company, because the shipper would hire another carrier.

As cited by the Transport Ministry, the RADOR Association (a national organization of local road authorities) has claimed that overloaded trucks cause 2.6 trillion rubles in damage to highways annually. According to statistics, there are no longer any problems with federal highways, since they are in between scheduled overhauls. But the president has ordered an overhaul of regional roads, which are still in a state of chaos.

The truckers and spokespeople of truckers associations surveyed by Vedomosti were unhappy with the current weigh stations. Bazhutin said that, compared with the Plato system, the weight-and-size monitoring system still had numerous shortcomings, for example, the fact that weather conditions had a huge impact on the accuracy of scales. He also noted that drivers do not see whether they are running overweight when they drive over the scales, and so when they receive a fine of between 100,000 rubles and 500,000 rubles [$1,500 to $7,500] in the mail, it is a complete surprise to them. If a trucker fails to pay the fine, his or her account is blocked.

“It’s just like with Plato. It doesn’t matter whether you were running empty or loaded. You have to pay whether you were overweight or not, since the system registered a violation. It’s impossible to dispute a fine. Since this whole business puts pressure on self-employed carriers, there will likely be protest rallies and marches,” said Bazhutin. “But we’re unlikely to set up a protest camp next to a weight station in Yaroslavl Region, say, when it is the federal authorities who are making the decision.”

Kotov argued that, since the bulk of cargo in Russia is shipped by trucks, this new financial burden would ultimately be passed on to consumers.

Political scientist Abbas Gallyamov argued the state of public opinion is currently such that things could kick off anywhere whatsoever. Any action by the authorities that is deemed unjust is capable of setting off a wave of protests. Gallyamov notes that Russian truckers have demonstrated their willingness to fight back and their capacity for coordination; moreover, they did so in circumstances in which public opinion was generally much more inclined to side with the regime. Given this past history, the chances of Russian truckers rising in protest again were great, he concluded.

Spokespeople for the Transport Ministry and RTITS told that the terms of the agreement were standard.

Translated by the Russian Reader. Photo courtesy of dangerousroads

Advertisements