*Government forced to unfreeze rates
*Deaf ears to multiple warnings
“What begins badly, ends badly.” That is one of the best-known sayings and this week it was brought up after the Ministry of Transportation announced that it was studying to unfreeze the rates of more than 143 toll stations run by the National Institute of Roads (Invías) and the National Infrastructure Agency (ANI).
As recalled, last January, the Government decided not to readjust rates this year, alluding that if they were increased in line with the high inflation of 2022, which closed at 13.12%, the impact for passenger and cargo transportation would be very strong, forcing an increase in the value of freight, tickets, and a basket of inputs for the sector and, in the end, all of this would accelerate the suffocating spiral of the cost of living.
From the outset, not a few experts warned that no matter how commendable the measure was, it lacked technical support regarding the cost of freezing rates for the public budget. Although it was regulated by decree that the resources that were not collected would be supplied with money from the Contingency Fund of the State Entities, it was not clear how the viability of the same would be affected and even less, how the million-dollar expenditures would be solved in the medium term, especially with a growing fiscal deficit and with a foreseeable economic slowdown. Deriving that responsibility in that the Ministry of Finance would allocate the money according to budget availability and what the Medium-Term Fiscal Framework and the Medium-Term Expenditure Framework of the Transportation Sector would indicate, was described as gaseous.
It was also alerted that the Government did not present the analyzes on the contractual impact that not readjusting the rates of 30 Invías and 113 ANI tolls would have. In fact, it was warned of the risk of a wave of lawsuits against the Nation for affecting the legal security of the road concession model, as well as for endangering the scenarios of financial equilibrium and business viability of Public Private Associations for the development of road infrastructure in Colombia.
Only months later would come the first studies. Fedesarrollo, for example, indicated in April that the measure could cost the public treasury about one trillion pesos in the first year, but in the long term, it would amount to 13.8 trillion. In June it was the Attorney General’s Office that warned of an imminent rain of lawsuits against the Nation, also pointing out that many road transport infrastructure projects could be put at risk.
This latest bell is very serious, especially if one takes into account that, according to the aforementioned Fedesarrollo study, PPPs have promoted record investment in transport infrastructure, allowing the construction of nearly 10,000 kilometers of primary roads. He also highlighted that the concession model offers advantages over the public model by allowing efficient risk allocation, reducing cost overruns and delays, as well as reducing budgetary pressure. He pointed out that, precisely for this reason, Colombia became an international benchmark in the implementation of this type of alliance between the official and private sectors.
The truth is that entering the eighth month of the year, and after the budget addition law approved by Congress in June made it necessary to allocate 500,000 million pesos to defray the cost of the tariff freeze, this week the Ministry of Transportation announced that it would begin to visualize when the value of tolls should be readjusted, which will undoubtedly have a severe impact on cargo and passenger transport (for which the Government also keeps the price of diesel frozen while it substantially readjusts that of gasoline). This will cause a kick in inflation, which falls, but at a very slow pace, and also has, this second semester, the axis of pressure derived from the El Niño phenomenon.
Although no specific date was set, it is estimated that the defrost will be before December. Neither has anything been said about the percentage of the increase or if it would be tied to the inflation caused in 2022 or that expected for 2023. What does seem clear is that in the midst of tax shelters, the Government cannot continue to cover this million-dollar amount and there are other spending priorities. In addition, according to the alarms from Fedesarrollo and the Attorney General’s Office, it seems that it was understood that there are flanks of impact that were not well calculated, as was warned last January.
Finally, it ends up proving that the decision not to readjust the toll rates was very improvised. As said, what begins badly…