The verdict issued by the Taipei High Administrative Court on Friday that deprived the Far Eastern Electronic Toll Collection Co of its priority status as installer of the nation's first electronic toll-collection (ETC) system has proved an embarrassment for the government and the contractor, and raised more uncertainties for motorists. The ruling has hurt the government's credibility and casts uncertainty over the future use of the build-operate-transfer (BOT) model.
Unlike the current toll system, where motorists have to brake to a stop at the toll plaza and hand over a ticket or cash to a tolltaker, the high-tech ETC system allows motorists to roll past a toll booth while a roadside sensor identifies the vehicle and performs an electronic transaction on a pre-paid account.
This type of system has become increasingly popular in other countries in recent years, and is worthy of support if it can increase toll lane capacity and reduce motorists' waiting times.
But the ETC system was plagued with problems even before the NT$10 billion (US$307.7 million) BOT project was awarded in February 2004 to Far Eastern, a joint venture headed by Far Eastone Telecommunications Co and Austria's Efkon AG.
Because of the business opportunities the project was thought likely to generate, more than NT$300 billion according to some estimates, there was much debate over which technology would perform best -- microwave or infrared technology. Far Eastern chose infrared. However, the whole project subsequently became mired in allegations of corruption -- including charges that standards were lowered to suit the chosen contractor -- and judicial authorities are still investigating several legislators, Ministry of Transportation and Communications officials and representatives of ETC providers.
When Far Eastern launched the service earlier this month more chaos ensued. Consumers complained that the system's vehicle on-board units (OBUs) were too expensive and threatened to boycott the service.
During the Lunar New Year holiday, the system almost paralyzed heavy holiday traffic because few vehicles were equipped with OBUs and therefore able to use the exclusive lanes set aside for the service.
The government has said it is considering appealing Friday's ruling to the Supreme Administrative Court. If it loses the appeal, it may either reopen the tender or abandon the BOT model and run the system itself.
The government's pledge to safeguard the rights of motorists regardless of the result of the appeal is welcome news, but at the same time, it's potential move to take over the system and use taxpayers' money to run the project is a concern.
In the face of the government's persistent budget deficits, how is it that it suddenly believes there may be sufficient funds to run the project, when it originally adopted the BOT model to save taxpayers' money?
A second concern is that the government has said it may buy back Far Eastern's toll facilities if its appeal fails. However, it's not clear that Far Eastern's infrared technology is the best solution. It is only suitable for single-lane toll collection, not the multi-lane free-flow toll collection that microwave technology can serve.
The government has been trying to minimize the damage in the wake of Friday's ruling. At the least, it should learn the lesson that it needs to increase the transparency of screening processes for future BOT projects.
Unfortunately, taxpayers are the ultimate losers in this project. It remains to be seen whether a more reasonable ETC system can be devised out of the ruins of the current mess.
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