Dubai: Salik could introduce 'dynamic pricing'; will toll charges increase?

Road toll collection operator Salik could introduce “dynamic pricing” in order to reduce congestion on Dubai’s roads, it was announced on Monday.

“The Roads and Transport Authority (RTA) could implement dynamic pricing through optimising the toll rates depending on the time of the day, for example, by charging a higher toll fee for specific lanes or during peak hours," Salik said in its IPO announcement.

Currently, this system is in place in Singapore and Dallas, USA.

Abdul Muhsen Kalabat, vice-chairman of the Salik Board of Directors, said dynamic pricing is one of the tools that could be used for the Salik system.

“Currently, we have fixed a fee of Dh4 for Salik. But there are other dynamic systems around the world that charge more during peak hours than off-peak hours. That is called dynamic pricing. This is based on a transportation study that will be conducted by the RTA and Salik to achieve the common goal of seamless transportation in the emirate. All this will be subject to approval from the Executive Council of Dubai,” he said.

Ibrahim Sultan Al Haddad, CEO of Salik, said dynamic pricing structure is related to adopting any changes that come in the future, including flexible tariffs or increasing the number of gates to manage traffic.

Mattar Al Tayer, chairman of Salik, said any increase in the number of gates or tariffs would be based on studies that are conducted by the RTA and Salik. The Executive Council will take a final decision in this regard.

In a statement issued in June this year, Dubai had said that existing toll gates “can be removed or modified” subject to a decree issued by the Chairman of the Executive Council of Dubai. “New toll gates can also be added subject to a decree issued by the Chairman of The Executive Council of Dubai, and after RTA conducts a comprehensive traffic study in coordination with Salik,” it added.

Salik on Monday said it will sell 1.5 billion shares or 20 per cent of the stake through the initial public offering (IPO) to raise around Dh3.67 billion ($1 billion). The company announced on Monday that it is likely to list on the Dubai Financial Market (DFM) around September 29. The Roads and Transport Authority launched the Salik road-toll system in 2007. There are currently eight toll gates and three million registered vehicles, out of which 1.8 million are registered in Dubai.

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New toll gates

The company said in its prospectus that it will “continually invest in its operations in order to seamlessly integrate new gates into its existing portfolio, allowing the company to immediately bring them online once construction is complete. A new gate typically takes approximately nine to 10 months from conception to become operational.”

It added that new gates are typically announced three to six months prior to operation. The company expects the new gate will cost Dh20-30 million, depending on the number of lanes at the selected location as the amount is paid over 10-12 months.

The company plans to install solar power capabilities in all existing toll gates over the next few years.

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