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#1488: LaBoule Toll Road Proposal: Durban comments

From: Lance Durban <lpdurban@yahoo.com>

It's a pity that the privatization movement in Haiti is
dead, insofar as Haiti's government agencies have proven
totally unable to provide consistent telephone,
electricity, and water supply.  Disregarding those big
political dinosaurs, however, let me propose a new, smaller
private enterprise to operate and maintain the main road
from Petionville (Place St. Pierre) to Kenscoff.  Besides
carrying out a useful function, LABOULE TOLL ROAD, S.A.,
would demonstrate that a well-conceived private firm can
frequently get the job done better than a bunch of civil
servants working part time.

     As a regular traveller on the LaBoule Road, I would
certainly welcome a public effort to widen, pave, and
maintain this busy and dangerous thoroughfare, but it's not
going to happen.  Haitian government funds just aren't
there, and no foreign donor would earmark aid for a road
which would primarily benefit so many already-wealthy
Haitians.  Yet there are hundreds of houses, big and small,
on that road which would derive enormous benefit from any
improvements to the road.  How then to bring the
beneficiaries together on a road project which would
ultimately benefit themselves?
     Voluntary contributions won't get the job done.  Some
might contribute for a time, but there would be too many
freeloaders, and an ultimate lack of responsibility would
almost certainly kill the effort.  I propose a private
company 'owned' by a minimum of 100 shareholders.

     The company will need a charter or authorization from
the (preferably democratically-elected) Government of
Haiti.  This will be the first and biggest stumbling block,
but let's assume for a minute that Haiti does get its act
together and holds a successful election.  Let's further
assume that the democratic body musters the courage to try
new ways of tackling old problems.
     Subscribers will be entitled to a maximum of 1 share
out of the 100+ being sold, and the IPO (initial public
offering) price will be exactly US$1000 per share.  No
family (defined as husband, wife and immediate children)
can buy or hold hold more than a single share, but there
will be no restraints as to nationality of shareholders or
their country of residence.  (To come up with the 100+
subscribers, we might well need some Haitian-American
     Only the possibility of very limited dividends will
ever be paid to shareholders, so this is not your typical
Wall Street IPO.  Of course, there is no guarantee as to
the future of share prices, but ownership records would be
kept, and presumably shares would change hands, subject to
our constraint that no one person or family can own more
than a single share.  Any dividends should be stipulated in
the government authorization to operate, and I would
suggest limited that to one annual, non-transferable, toll
medallion for the shareowner's personal vehicle every ten
years, with the first such medallions issued in the year
2010, the second set of medallions issued for the year
2020, etc.  That is, for the nine intervening years, even
the shareholders would be required to pay the tolls.  The
point is that the financial return on share ownership will
not be the driving force in attracting the 100
shareholders.  This is intentional, to avoid the charge
that the owners of the new toll road are lining their
pockets at the hands of the general public.  If the IPO is
oversubscribed, fine, but a minimum of 100 shares need to
be sold in order to move onto the next step.

     The 100+ shareholders would elect a Board of Directors
and an initial set of company officers, then commence the
construction of a toll plaza at the beginning of the
LaBoule Road (on the police barracks site near the Kinam
Hotel in Petionville, currently inhabited by a bunch of
junk cars and a non-functioning vehicle inspection
station).  The existing two lane road would be toll free
going up, while 4 or 5 toll booths would serve cars coming
down the mountain entering Place St. Pierre, Petionville. 
Construction of the toll plaza would be financed by the
corporation's initial paid in capital on what I assume is
already public land.
     Toll levels would require approval by a government
body (Min of Finance? DGI?  TCTP?), but the private company
could periodically petition for toll rate changes.  Annual
toll medallions could be bought by commuters, who could
save a little money as well as be able to speed through one
or two cash-free, expedited booth lanes.  Camionettes with
more that 5 passengers might be given a
specially-designated, toll-free lane, while trucks with six
or more tires would have to pay a larger toll.

     Tolls collected would almost immediately be put to use
in visible improvements for all road users.  Pothole repair
at first, but soon, shoulder strengthening, widening of
sections, putting in laybys for camionettes to use while
picking up and discharging passengers, and maybe eventually
my own pet project...installing a tunnel shortly after the
Mont Calvert turn-off to eliminate a particularly bad blind
turn.  (Imagine, a real tunnel!  I'll bet even the DR
doesn't have one of those.)

     Nobody likes taxes, but there are a number of reasons
to think LABOULE TOLL ROAD, S.A. might work.  Everyone who
uses this road now curses the bumps, the heavy traffic, the
constantly stopping camionettes, etc.   Seeing early
improvements financed by their own tolls would help silence
critics.  Seeing property values rise as access to
LaBoule/Kenscoff becomes easier would also help.
     Critical to the feasibility of the operation is
maintaining a good set of books and ensuring that the 100+
shareholders are not seen as personally profiting from
their shares...no 'grand mangeurs' carping, please.  As
with a publicly-traded company, quarterly financial
statements would be published, and development of a market
for the trading of these shares would be encouraged.
     Although many in Haiti are adamently opposed to
privatization, critics tend to be the folks who would not
mind seeing wealthy residents of LaBoule paying more taxes.
 Thus, in this instance, there might not be much objection
from that quarter, particularly insofar as LABOULE TOLL
ROAD, S.A. would be a totally new copmpany.  There need be
no loss of existing public sector jobs, since the repair
and maintenance of LaBoule Road is a job that isn't being
done on a regular basis now anyway.    

     Although I would like to see a better road, at least
part of my interest in this project is that I think it
would be useful in showing the doubters in Haiti that a
100% private entity can perform well in a quasi-public job.
 It would further remind folks that although a non-elected,
private enterprize may be providing a service to the
public, it is ultimately the Government of Haiti which has
to approve any rate (toll) increases.  This little feature
has been frequently overlooked by those who argue that
selling TELECO (for example) would only line the pockets of
the purchaser(s).  Indeed, that could happen only if the
Haitian Government allowed the private owner to
independently establish monopoly pricing.

     At some point, the Government of Haiti would surely
notice that LABOULE TOLL ROAD, S.A. is generating a chunk
of revenue.  Why not grab some... to be used for other good
and noble government projects, of course?  From Day 1 it
should be written in the charter that all tolls collected
can only be used for repair and maintenance of LaBoule
Road.  Well OK, may a 10% TCA tax could be permitted to
kick into the toll structure starting in 2010 if things are
running smoothly.

     For any government to have the moral authority
necessary to establish a fair and successful tax system
(either a traditional public effort a la DGI, or a
privately-franchised entity as proposed here), I would
argue that it is critical for the government to be
democratically elected.  That is unquestionably one of
Haiti's biggest problems today, but well beyond the scope
of this proposal.

Lance P. Durban
e-mail:  <lpdurban@yahoo.com>

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