Estimating the Enforcement Costs of Israel’s toll road operator

‏Estimating collection costs of Derech Eretz, Israels' toll road operator
The Cross-Israel Highway was built in stages, beginning in 1993. It is Israel’s first and only toll road, and its users are billed at home. Cross Israel Highway users who don't pay their road fees on time are charged with compensation and reimbursement expenses (CnRE) amounting to the proportion of the actual operation costs incurred by the concessionaire/operator for enforcing this payment. The purpose of this study was to measure the combined costs of enforcement faced by the concessionaire/operator and the implementing authority, the Cross Israel Highway Ltd, and to update the extent of the CnRE accordingly.

We had to meet the challenge of conducting a thorough study of the concessionaire's cost structure and enforcement costs based on the statutory law and regulations while relying mainly on information provided by the concessionaire, who is an interested party. The results of this study had substantial financial implications for the concessionaire, which entailed dealing with powerful economic interests on the concessionaire’s behalf.
The project required studying and analyzing the concessionaire's and operator's expenditure functions, the environment and incentives they face and the legal and contractual frameworks within which they operate, while coordinating with the implementing authority in all formal procedures. We also participated in a hearing in which the concessionaire raised its arguments regarding our work outcomes, and worked with the relevant authorities within the Ministries of Transport and Finance to fully update the CnRE regulations.
The project's results led to an update of the CnRE which reflects the actual costs of enforcement. We assisted the implementing authority to produce public value so that over time, CnRE was reduced by approximately 85% relative to the initial charges.

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