Mr. Michael Nolan:

Along with my colleagues, I thank the committee for its invitation to attend today. I understand that it wishes to focus on the issue of unopened motorway service stops, the reduction in the budget for maintaining national roads and recent issues regarding toll collection on the M1.

Before turning to the specific issue of unopened motorway service areas, I must set out the context to the TII's motorway service area policy and delivery programme. When the major inter-urban motorway plan was announced, which would connect Dublin to Belfast, Galway, Limerick, Cork and Waterford, concerns were raised regarding the impact on passing trade that a partial or completed motorway would have on towns and villages across the country. During the early years of the motorway upgrade programme, the TII, or the National Roads Authority as it was at that time, was not active in the area of developing motorway service areas. It had been incorrectly assumed that the private sector would deliver service facilities at motorway junctions.

The matter was attracting considerable public debate over the absence of service areas on the emerging motorway network. Concerns focused on the lack of rest areas for heavy goods vehicle, HGV, drivers, easy access to food, fuel and toilet facilities as well as the non-availability of safe and secure parking facilities for drivers who wished to break from their journeys.

In 2005, the TII responded to these concerns by reviewing its policy on the provision of service areas on the motorway and high quality dual carriageway sections of the national roads network. In 2006, we announced a strategy in which we would be proactive in the provision of 14 on-line service areas in the interests of all road users on the motorway and dual carriageway network. The TII would become directly involved in securing on-line service areas only. Service areas with direct access to the motorway do not directly compete with existing fuel and other retail facilities in the immediate locality and do not become destinations in their own right. It is also important to note that, under the provisions of the Roads Act, only the TII or road authorities are permitted to develop on-line service area facilities. By the end of 2009, a total of seven service area schemes had received An Bord Pleanála approval and one, proposed at the M6-M17-M18 junction at Rathmorrisy, did not.

I will turn to the first tranche of service areas. In October 2009, the TII awarded a contract for the design, construction, operation and financing of three service areas, one located on the M1 at Castlebellingham, a second on the M1 at Lusk and the third on the M4 at Enfield. Each of these is the subject of a 25-year concession contract. The service areas were constructed and opened within 12 months of the contract award. These service areas are producing significant benefits for road users as demonstrated by the growing number of users availing of the facilities provided. A survey undertaken in 2013 noted a high level of customer satisfaction.

The construction of the first tranche has not only demonstrated to private sector interests the level of demand for these services, but also the high level of services and infrastructure required to meet all road users' needs, including HGV drivers. The turn-in rate achieved speaks for itself.

We delayed the launch of the second tranche of service areas for some years pending an improvement in the economy. In March 2013, the Government published the Road Safety Strategy 2013-2020, which set out actions to support the reduction of accidents on the road network, recognising the safety benefits brought by the development of service areas. This element of the Government's road safety strategy is aligned with the position of the European Commission, the Road Safety Authority, RSA, and the TII that the provision of service areas is an essential component of a safer and efficient transport network. Service areas serve the needs of road users and seek to reduce fatigue-related collisions on the high speed national road network.

In line with policy objectives, the TII proceeded with the appraisal of the second tranche of service areas and the tendering for same. This second tranche is composed of the construction and operation of service areas on the M6 motorway east of Athlone and the M9 motorway south of Kilcullen. It also includes the outfitting and operation of a service area on the M11 motorway approximately 10 km north of Gorey, which was constructed as part of the Newlands Cross and M11 Arklow-Rathnew scheme.

The second tranche of service areas programme is being procured with a 25-year concession. The appraisal of this tranche, carried out in accordance with the Department of Transport, Tourism and Sport's common appraisal framework, finds that the benefits of these areas outweigh the costs. The service areas are single-sided facilities, reflecting the lower traffic volumes on the adjacent sections of the network compared with the first tranche. Access to the service areas will be provided using a grade-separated junction on the motorway, with a new bridge connection to facilitate access from both directions. This reduces the overall footprint and the construction and operational costs of the service areas compared with two-sided facilities.

The TII commenced the second tranche tender competition with an eTenders notice in March 2014, with the tender documents issuing to the short-listed tenderers in June 2014 and final tender submissions received on 24 March 2015. In August 2015, before the award of the contract, one of the unsuccessful tenderers issued legal proceedings seeking a judicial review of the tender evaluation process that resulted in the selection of the preferred tenderer. The tender award process was suspended pending the outcome of the legal challenge. The judicial review was heard in the High Court in June 2016. In December of that year and before the delivery of the ruling, the challenger requested the court to put a stay on the case and the legal challenge was subsequently withdrawn by the appellant at the end of April 2017.

Following the withdrawal of the legal challenge, the TII resumed contract discussions with the preferred tenderer. Given the significant delays between the submission of the original tenders and resumption of the process, the preferred tenderer has had to remobilise a project team and review proposals having regard to the duration of time since submitting its tender. This process is nearing conclusion and the TII anticipates a contract award early in the third quarter. Construction works will commence shortly after that.

The unopened Gorey service area and its junction on the M11 motorway were constructed as part of the Newlands Cross and Arklow-Rathnew scheme and completed in 2015. In parallel, the TII undertook advance works contracts to provide motorway service area junctions at the M6 and M9 service area locations. The M9 Kilcullen works commenced in April 2014 and were completed in March 2015. The M6 Athlone works commenced in September 2014 and finished in July 2015. The capital cost of constructing these two junctions was €19 million. All of these activities were programmed with the objective of ensuring site access before the date of contract award for the second tranche concessionaire contractor, which was anticipated to occur in early 2016 by maintaining a degree of reasonable float within the programme.

The legal challenge and the consequent delays to the award of the motorway service area contract have resulted in the TII arranging for the protection of the investment in the Gorey service area building and facilities. It is necessary to safeguard the expenditure already invested in the Gorey service area by providing measures for security and daily upkeep of the building. The expenditure to the end of 2017 in this regard was in the order of €600,000, with monthly costs of €19,500 until the handover to the concessionaire.

There are also social costs associated with the challenge of the procurement decision. Resolving this legal challenge introduced significant delays to the delivery of this important infrastructure project. These social costs relate to the unavailability of these facilities, which will provide safety benefits to the road user.

Taking all costs into account, including the legal costs associated with the procurement challenge which amount to €575,000, it is expected that spending on the development of the service areas will outturn at less than the predicted cost. In accordance with the tender received, TII will not be contributing to the construction costs and similar to the first tranche concession, there will be no ongoing payments to the concessionaire during the contract term while TII and the taxpayer will benefit from revenue share payments. I expect that following the contract award, the Gorey service area fit out-operational readiness could be completed within a four-month programme while the construction period would be approximately 15 months for both the M6 and M9 facilities, which will constructed concurrently.

I will now discuss the reduction in the budget for maintaining national roads. While the increase in funding for pavement capital renewals in the 2018 budgets was very welcome, our current funding allocation for road maintenance was cut by approximately €6 million, or approximately 16%, to €31.6 million. This unanticipated cut again accelerates the ongoing cuts to maintenance budgets that have taken place since 2008. By way of comparison, TII received an annual road maintenance allocation of €58 million in 2008. This was subsequently reduced as part of the measures implemented during the financial crisis at that time and in the intervening period, TII's annual allocation for road maintenance has been progressively cut. Our modern state-of-the-art roads systems incur significantly more maintenance and operational costs than the older legacy roads but instead of increased maintenance funding to cater for this, our funding has been sharply reduced. Furthermore, we are now required to have more sophisticated winter maintenance arrangements than existed before 2008. Consequently, our winter operations costs are higher. Also, increases in energy costs associated with public lighting significantly exceed the CPI over the period in question again further eroding available budgets. All of the above means that the current level of maintenance funding for roads is totally insufficient. Benchmarking our maintenance expenditure against peer roads administrations across Europe has demonstrated that Ireland is very much at the bottom of the league table when it comes to expenditure on national road maintenance. An inevitable consequence of the erosion of maintenance budgets is that much essential routine repair and maintenance of pavements and other road assets is not taking place. If current levels of maintenance funding are not increased, there is a increasing deterioration in the condition and capital value of our national roads network. Even with increased funding for capital pavement renewals, if routine maintenance is not adequately funded, we will see pavements and other assets deteriorating more quickly and having to be replaced earlier than otherwise would have been the case. A proper balance between ordinary maintenance expenditure and capital renewals investment is essential in order to deliver the best value for money. At present, that balance does not exist. In relation to our 2018 maintenance allocations, we have been forced to substantially cut our allocations to local authorities. We have reduced our provision for salt purchases for 2018. While salt stocking levels are adequate, we will review the situation following the winter season. We have also cut our allocations for traffic route lighting. The budget provisions for maintenance of the high-speed motorway network has been maintained.

I will now address recent issues regarding toll collection on the M1. Last week, the Chairman of this committee alerted TII that certain users of the M1 were subjected to an incorrect toll charge. I can report that Celtic Roads Group (Dundalk), the company responsible for the operation and maintenance of the tolled M1 motorway, has confirmed that a small proportion of customer journeys were subject to an incorrect charge. The toll by-laws for the M1 Drogheda bypass provide that where road users exit the toll road having paid a toll and within three hours re-enter to continue on their journey in the same direction, a second toll payment is not required. The operator has been engaged in an upgrade of the toll collection system since mid-April 2017, which is nearing completion. It has stated that, during the upgrade works, a limited number of tag customers entitled to a free passage based on the above three-hour rule were in fact charged at the second toll point on continuing their journey. TII was informed on 10 January 2018 that re-entry transactions in respect of a limited number of tag trips had a second toll incorrectly applied. TII met with the operator on 11 January to establish the extent and cause of the issue. On 12 January, the operator confirmed its assessment of the extent of the issue and has arranged for full refunds to be dispatched to all relevant tag holders. The data provided indicate that the overcharging relates to approximately 1,500 tag customers affecting about 2,000 individual transactions amounting to a total value of €6,000. This issue arose only for those using electronic tags for payment and does not affect cash customers. The number of toll transactions eligible for free passage under the three-hour rule is approximately 8,000 per month. Analysis of the data indicates that the start of the problem coincides with the commencement of the toll collection system upgrade project in mid-April 2017. Since becoming aware of the error, we have conducted spot checks and verified that the three-hour tag re-entry mechanism is now performing as intended. TII will continue to monitor the issue and in addition, we will secure an external audit of the technology which governs the transaction charging regime that applies the three-hour re-entry benefit to customer tag accounts. The operator has engaged with the various tag providers and others involved in the overall electronic tolling system so as to ensure that customers' tag accounts that have been affected by this issue are credited as soon as possible and is confident that this will be achieved by the end of January. Celtic Roads Group (Dundalk) has issued an apology to affected customers for the error. These customers will receive formal notice confirming the refund in their next monthly statement.

Before concluding my presentation, I will update the committee on the outlook for TII's strategy for the improvement of the national road network having regard to three strategic priorities, namely, asset management, network rehabilitation and operations; minor and safety works; and major improvement projects. I welcome the recent announcement by the Minister of enhanced funding arising from the mid-term review of the capital investment plan. This year will see a modest increase in investment in asset renewals and traffic management and bottleneck projects. We will also see more minor and safety improvement schemes reaching the construction stage during the coming year. However, TII is still faced with a shortfall in annual funding for the asset network we manage and operate, although the shortfall has reduced since I last reported to this committee. This capital underinvestment, if allowed to continue, would ultimately impact on both safety and reliability and result in greater costs to renew our assets in the long run rather than maintaining them sustainably. The Minister has also indicated his support for the revitalisation of the planning programme for national roads schemes for the purposes of creating a pipeline of worthwhile projects for progression through the planning stages over the life of the ten-year capital investment plan. The selection of these roads projects will have regard to the fit of the project to the principles set out in the emerging national planning framework. This is a welcome development given the long timelines to achieve planning consent for major infrastructure.

On the public transport side, having recently opened the extension to the Luas green line, TII's focus on new public transport infrastructure is now firmly concentrated on the provision of metro for Dublin. The National Transport Authority's, NTA, transport strategy for the greater Dublin area, 2016-2035, provides a framework for the planning and delivery of transport infrastructure and services in the greater Dublin area over the next two decades. The strategy defines metro as a high-speed, high-capacity and high-frequency public transport link from the city centre to Dublin Airport and Swords. The city centre section is to be underground. As described in the transport strategy, it is anticipated that the metro will ultimately tie into Dublin's existing Luas green line system enabling through running of metro services from Swords to Sandyford. TII, in collaboration with the NTA, is engaged in the process of developing the design of the metro project with the objective of the commencement of the project's construction in 2021. Consultations around the emerging preferred route will commence in the coming months.

While my opening statement has addressed the specific points raised by this committee, we will be happy to answer questions on any particular issue raised or indeed on any other matters of interest. Should we not have the information requested to hand, we will follow up with a written response.