Gaping Holes in the Asphalt
Path paves itself for the penniless individual.
Lo and behold, the gaping chasm in road maintenance funding has been exposed, and it ain't pretty, folks! According to the sharp minds over at the Higher School of Economics (HSE), we've been shortchanging our roads since our beloved government decree No. 658, way back in 2017. It's a funding gap so wide, it's got potholes the size of compacts!
Tatiana Kulakova, Director of the Institute of Transport Economics at HSE and a die-hard Doctor of Economic Sciences, took a stand at a recent forum, warning that the lack of proper funding for our dear roadways will continue to haunt us for the foreseeable future. This melancholy reality is based on the government's own admission in Decree No. 768-r, which covers the Road Activity Plan until 2030.
The total funding for the upkeep, repair, and renovation of federal roads clocks in at a whopping 2.48 trillion rubles, but watch your wallets, 'cause there's a funding deficit of a staggering 1.73 trillion rubles staring us right in the face! Talk about a belt-tightening downpour!
To add insult to injury, the deficit will continue to eat away at our wallets in the coming years, to the tune of an undistributed reserve of 850 billion rubles between 2028 and 2030. Yikes!
But here's the kicker: Decree No. 658 is as outdated as a flip phone these days, according to Kulakova, failing to account for the increased demands on our roads, such as the surging need for automotive transportation and the increasingly costly construction resources and equipment. These escalating costs have left our average tire prices skyrocketing by a gut-wrenching 164% since 2018, and that's just the beginning!
Social and Economic Risks Piling Up
As if that weren't enough to give us all the heartburn, the continuing funding shortages will have some alarming consequences. For starters, the once promising trend of improving the condition of our federal highways has ground to a halt. Gone are the days when more than 84% of our highways were in tip-top shape, as the share has plummeted to a dismal 73.88% by 2024. To make matters worse, this indicator is supposed to reach a jaw-dropping 85% by 2030, according to the national project "Infrastructure for Life".
The lack of funding for road maintenance will also have a domino effect on other non-related national projects, specifically labor productivity. As productivity is tied to the revenue generated by industry organizations, the underfunding will invariably lead to a decrease in productivity, Kulakova warns.
But wait, there's more! The shortage of funding will inevitably take a toll on road safety. In 2023, the number of road traffic accidents in Russia increased for the first time in a decade, with almost every third accident attributed to violations of the operational condition and maintenance of roads.
Car owners are getting squeezed as well, with increased costs due to longer trips and the continuous maintenance of their vehicles, while the entire economy bears the brunt of the consequences with untimely repairs driving up the future cost by a whopping 1.5-2 times and reducing the lifespan of bridges.
Pulling Ourselves Out of This Hole
It's time to get proactive, folks! To help alleviate this funding gap crisis, the National Association of Infrastructure Companies (NAIC) has put forth some proposals to the government. While the specifics of these proposals remain elusive, they suggest amending the outdated Decree no. 658, increasing budget allocations for road repair and maintenance, and introducing a traffic intensity coefficient to calculate budget expenditures.
They're also advocating for phasing out unnecessary works not specified by GOSTs from state contracts and legally prohibiting the use of reducing coefficients in the calculation of the initial maximum contract price (NMCK). This restriction would prevent roads of higher categories from being maintained at the norms for category V roads, according to Kulakova.
Heading Down a Bumpy Road
The press representatives from the Ministry of Transport, Finance, and Avtodor (the state company operating toll roads) haven't shared their thoughts on these proposals yet. In the meantime, Valentin Ivanov, the first deputy minister of transport, acknowledged that obstacles and delays have emerged in the road construction industry, with financial challenges affecting numerous organizations and prompting wage arrears.
Ivanov took note of the proposals during the plenary session of the forum but didn't delve into the specifics, stating that initiatives promoting fair pricing in the market are being examined.
Stay tuned, folks, as we navigate this bumpy road to a better, pothole-free future! 🚧🚗🚀
- The funding deficit for road maintenance, estimated at 1.73 trillion rubles, is a significant concern, as highlighted by Tatiana Kulakova at a recent forum.
- The shortage in road maintenance funding has led to an increase in expenditures for car owners due to longer trips and continuous vehicle maintenance.
- The National Association of Infrastructure Companies (NAIC) has proposed amending Decree No. 658, increasing budget allocations for road repair and maintenance, and introducing a traffic intensity coefficient to calculate budget expenditures.
- The lack of funding for road maintenance will have a domino effect on other national projects, specifically labor productivity, according to Tatiana Kulakova.
- In 2024, the share of federal highways in good condition has dropped to 73.88% from more than 84%, signaling a halt in the trend of improving the condition of our federal highways.
