66
Paper No. 02-4106
Urban Transport Strategy for
Colombo, Sri Lanka
Slobodan Mitric
International sharing of urban transport experiences may be beneficial
for practice and help give form to a concept of strategy. Main problems
and issues of urban transport in Colombo, Sri Lanka, were identified,
and a strategy was proposed for improving the performance of the trans-
port system for travelers and its impacts on urban development. On the
streets of Colombo, buses compete for scarce space with passenger vehi-
cles, motorcycles, and vans. Crossing bicycle riders and pedestrians have
an even more difficult time. Privately operated buses dominate the pas-
senger market, complemented by three public-sector operators, the sur-
vivors of several waves of reorganizations and reforms. Both groups of
operators suffer from having to charge low fares and from increasing
street congestion, but private operators freely manage their staff and
vehicles and do not follow prescribed routes, stops, and frequencies.
Strategic issues involve the pricing of services in the presence of two
distinct markets (low-income travelers and those who own or aspire to
own a vehicle) and two inconsistent regulatory regimes, the absence of
reserved street space for public transport vehicles, and intergovern-
mental relations concerning jurisdiction and funding for urban trans-
port modes. Pivotal propositions involve redefining the government role
as regulator of public transport services; using the social assistance system
to help low-income travelers (thus liberating fare making); upgrading
the suburban lines of Sri Lanka Railways into a separate, high-quality,
regional rapid transit network; and adopting a regionally oriented road
pricing and financing system.
This discussion, summarizing a longer report (1), addresses urban
transport problems in the Colombo metropolitan region (CMR) of
Sri Lanka. Following a brief review of the transport system of CMR,
main issues behind travel problems experienced by the area resi-
dents are identified and a government strategy is proposed for im-
proving the performance of the system for its immediate users and
its impacts on urban development. The objective is to contribute to
an international exchange with regard to urban transport problems
and corrective actions, which in the aggregate will lead to better
practice. An additional objective is to test a specific concept of strat-
egy. In any given problem context, there exist several pivotal dimen-
sions in which the decision makers have jurisdiction and some clear
alternative choices for action. The underlying implication is that the
choices are difficult in technical or political terms, and that important
trade-offs are present. The strategy-making process proceeds by iden-
tifying these dimensions and identifying alternative orientations in
each one. The strategy consists of positions taken (recommended) in
each pivotal dimension.
Over the last 5 years, much work has been done on the future of
urban transport in CMR. Some of it—such as the regional structure
plan completed in 1998 by the urban development authority—was
The World Bank, 1818 H Street NW, Washington DC 20433.
■ Transportation Research Record 1799
done by local agencies in line with their mandate. Major policy
papers addressing public transport regulation and traffic manage-
ment were written by special-purpose committees set up by the gov-
ernment of Sri Lanka. In 1998, a transport sector strategy for the
country as a whole, but also addressing transport in CMR, was put
forward by a joint effort of the government and the World Bank (2).
Finally, a two-phase Colombo urban transport study (CUTS), com-
missioned by the Ministry of Transport and carried out by indepen-
dent consultants in the second half of the last decade, ended in 1999.
CUTS produced an overall strategy, policy papers on major strate-
gic issues, and a master plan, this last inclusive of implementation
details for several of its key elements. The work summarized was
meant to produce a brief but wide-ranging and critical synthesis of
what had been done and cast a forward look. The work started with
a desk review of CUTS and the other reports and papers mentioned
above. This led to commissioning two small-scale studies to explore
some hitherto neglected subjects, namely, the problems that low-
income travelers may have with public transport services and fares,
and the capacity of local institutions to manage and plan urban trans-
port systems in CMR. The resulting amalgamated strategy adapts
and extends what had previously been proposed, although—because
it eschews the essential subjects of land and environment—it falls
short of being comprehensive.
BACKGROUND
The city of Colombo (population 0.7 million) and its region (popu-
lation 5 million, inclusive) dominate Sri Lanka in demographic, eco-
nomic, and political terms, and—through the port and airport—rep-
resent the nation’s key gateway to the world. The population growth
rate is 2.0% to 2.5% per annum. The work force is 2.2 million, of
which 1.9 million are employed. About 0.6 million work in
Colombo itself, but new growth is more intense in the middle and
outer segments of the region. The labor market is sharply polarized,
with formal jobs being stable and rigidly protected and therefore
highly sought. Informal jobs tend to be of short duration, which
makes informal labor highly dependent on daily mobility. Incomes
are growing at about 4.3% per annum. The two bottom deciles of the
income distribution, corresponding to poor and very poor people,
have mean monthly incomes of rupees (Rs) 732 and Rs 1,596 per
earner, respectively. These correspond to Rs 1,866 to 3,144 per
household. The mean monthly income of the top decile is Rs 21,465
per earner, and Rs 29,634 per household. These data are from 1996
and 1997 surveys, when U.S.$1 was trading for about Rs 58. In
those years, Sri Lanka’s gross national product per capita was
about US$800, but about US$3,000 with regard to the purchasing
power parity. The country’s economy is growing at about 2.7% per
annum.
Mitric
Apart from Colombo itself, the region is low density and spread
out along radial corridors. It generates about 5.5 million daily trips.
Motor vehicles carry about 73% of all travel, whereas 22% of trips
are made on foot and only 5% are by bicycle. The workhorses of the
transport system are street buses, which carry 63% of all motorized
trips. Suburban services of Sri Lanka Railways carry another 5% in
the aggregate but up to 25% of transport passengers in major corri-
dors. (In fact, passenger kilometers on the suburban lines make up
as much as 20% of the total for the entire railway.) The remaining
32% of trips in CMR are carried by automobiles, vans, three-wheel
taxis, and motorcycles. Modal split is shifting toward individual
vehicles, especially toward two- and three-wheelers.
The majority of street buses (7,300) are privately owned and oper-
ated by owner or leased by owner to individual operators. Licensing
by the government is necessary, but routes, frequency, and other ser-
vice obligations remain nominal. Buses tend to be of the mini size
(fewer than 30 seats), though an effort is being made to license only
standard-size vehicles. In addition, three public-owned regional
transport companies (RTCs) were created in 1998 by combining
many small, “people-ized” public-sector companies, themselves a
product of preceding regulatory reform (3). These operate about
1,600 standard-size buses. Fares are regulated (against the letter of
the 1992 law) and apply to all operators. Passengers pay Rs 2 to 4 for
short trips and up to Rs 10 for a 10-km trip. Fares are considered
inexpensive and affordable even to the lowest-income people. About
1,000 private buses provide higher-quality, seat-only services, at fares
115% to 160% higher than the regular ones. Students and school-
children enjoy deep discounts, but on public-owned lines only. The
state compensates RTCs for offering discount fares and for provid-
ing services on some low-density, rural routes. In 1998, the com-
pensation to the three operators active in CMR amounted to about
Rs. 106 million (US$1.7 million). Reflecting a common view that
standard fares are not commercially viable, RTCs also receive in-
kind assistance, usually new buses and bus engines, but no cash sub-
sidies. Private operators receive no assistance from the government
and survive by avoiding low-density routes and off-peak periods.
Although operating costs have risen with inflation, fares have not.
Current fares per kilometer are 50% lower in real terms than in 1990.
RTCs’ cost recovery from revenue and compensation is 80% to 85%
relative to total operating costs. This is much higher than the cost
recovery of the suburban lines of Sri Lanka railways, which is less
than 40%, but that is no solace. Financial losses of RTCs have been
allowed to accumulate while awaiting the next stage in the policy
reform process. It is easy to imagine the consequences of this attitude
on the vehicles and facilities of these companies, and the state of their
balance sheets.
Total vehicle ownership in the city of Colombo is 262 vehicles
per 1,000 inhabitants, falling to 97 vehicles for CMR as a whole.
Motorcycles are the largest category (41%), followed by automo-
biles and vans (33%), freight vehicles (13%), three-wheelers (9%),
and buses (3%). Motorcycle ownership has been increasing at 15%
per annum, and that of four-wheel vehicles at 5.6% per annum. Still,
only 12% of households in the region own motorcycles, only 3.4%
own cars, and more than 40% own bicycles. The discrepancy in
these two sets of numbers is because of the ownership being in the
hands of firms and government institutions. Only 32% of motor-
cycles and 16% of automobiles belong to households. Owning and
operating a vehicle are expensive in Sri Lanka. Import taxes are
100% to 200% for passenger automobiles, though they are nearly
zero for buses and motorcycles. A liter of petrol and diesel costs Rs
Paper No. 02-4106 67
50.00 and Rs 13.50, respectively (1999 data), with taxes accounting
for 74% of the retail price for petrol and 18% for diesel. The total
amount of fuel and vehicle taxes collected from road users in 1999
was about Rs 12.4 billion, with trucks paying considerably less and
private automobiles more than the wear and tear they cause the net-
work (2). The proceeds from fuel and vehicle taxes are not dedi-
cated. In 1999, for example, only about Rs 7.9 billion was spent on
roads.
Despite Colombo’s predominance in the country, the strongest
transport-related institutions are at the national level, attached to
the Ministry of Transport. These include the Road Development
Authority and the Sri Lanka Central Transport Board, the holding
company and de facto regulator of RTCs. The corresponding insti-
tutions at the provincial level, for example, the Provincial Road
Development Authority and the Western Province Road Passenger
Transport Authority (which regulates private bus operators), are of
recent vintage and not well developed. This reflects the govern-
ment’s hesitant approach to decentralization of political and bud-
getary power. Local governments are also weak in institutional and
financial terms, with the exception of the Colombo Municipal
Council, which has solid if too traditional technical services.
TRANSPORT SYSTEM PERFORMANCE,
PROBLEMS, AND ISSUES
How well does the transport system work for its users? The public
transport network is extensive, and services are inexpensive. Unfor-
tunately, the services are low in quality and unsafe. Street buses are
infrequent and therefore quite overcrowded and uncomfortable.
Buses in private operation are said to be driven at unsafe speeds only
to spend inordinate amounts of time at stops, waiting to become full.
Suburban rail services are also infrequent and overcrowded. Women
and older people pay the highest price for this situation. This is dif-
ficult enough for travelers along radial routes, but much worse for
those who must transfer between bus lines, or between bus lines and
the railway, as fare integration, not to mention timetable coordina-
tion, are lacking. Better-quality services are available, but the price
differential is quite high. The net impact is to create strong pressure
to abandon public transport in favor of motorcycles and other
individual modes. This, in turn, contributes to daily traffic problems.
The key issue underlying low-quality public transport services is
an inconsistent public policy toward the regulation and financing of
the public transport sector. Whichever combination of fares and
budget support is chosen by the government for the public transport
system, it must be affordable to the passengers and to the public
purse and must permit the viability of the operators. Sporadic and
unsystematic fare increases may be politically convenient and may
indeed be affordable to low-income travelers. In the absence of a
matching compensation, however, this practice has eroded the rev-
enue base of the operators, with sizeable costs to both stock and
flow. Private operators adjust by adopting familiar predatory prac-
tices, disregarding the nominal service obligations. If these were
tightened and enforced, while leaving the fare side untouched, the
result would be exit from the market. RTCs do not follow predatory
practices, but cannot maintain service standards and their costs are
mounting. The companies are in arrears, with downstream problems
of underspending for maintenance, repairs, and fleet renewal; bank
overdrafts; and nonpayment of suppliers and social insurance funds.
The most visible symptom of the erosion of the physical plant is the
68 Paper No. 02-4106
immobilization of some 1,300 bus vehicles, without funds to repair
or replace them. Since staff levels cannot be adjusted accordingly,
because of labor protection laws, staff that would be fully occupied
at an efficient level of fleet availability are retained at normal
salaries with only a half-size fleet. General overstaffing makes it
also difficult to make any changes to the staff structure, so there is
in fact a shortage of drivers and mechanics. The costs of neglect are
rising with each day of postponed policy reform. On the demand
side, the passengers are getting the worst of both private and public
suppliers.
The declared concern of the government is to keep public trans-
port fares affordable to low-income travelers. The expenditure sur-
veys indicate that this objective has been reached. The residents of
CMR, whose income is in the lowest two deciles, spend only 1.2%
to 1.5% of their income on public transport. This is low by any stan-
dard, though it does not measure the possible exclusion from service
because of price, availability, or comfort. Moreover, it is not certain
that the survey results are accurate. It is easy to make synthetic travel
scenarios with plausible combinations of income and location in
CMR at which the current fares are prohibitively expensive. A travel
scenario involving a 10-km journey to work or school, made by all
members of an average-size household, may require as much as
38% of the household income at the lowest decile and 17% at the
next-lowest decile. That actual transport expenditures can be much
in excess of the cited average ones is confirmed by real-life stories
of Colombo residents interviewed in the course of recent transport
studies. It is safe to conclude that, the expenditure surveys notwith-
standing, low-income households in the CMR may need assistance
with travel costs. It does not follow that general fares should be set
even lower than at present. Low-income passengers should be
assisted in other ways. The reverse side of the low-fare coin is that
public transport services are used by people from higher-income cat-
egories. Indeed, data from the CMR show that income distribution
of bus passengers is quite similar to the overall income distribution.
If the fares were set to be affordable to passengers in the second-
lowest income decile, the benefits have been leaking to all eight
higher deciles. The average income of passengers using suburban
rail services is much higher than the population average, so the leak-
age of benefits is even higher than for the street bus services. Bene-
fit leakage has been observed in Sri Lanka even in poverty-targeted
programs, such as Samurdhi. Nearly half of the benefits of this pro-
gram are said to have been captured by households belonging to the
top three income deciles (4). Intended subsidies and leaked subsi-
dies can add up quickly to a level not sustainable by the subsidizing
arm of the government, be it local or national. It is therefore essential
to minimize the leaks.
An inconsistent policy typically reflects an unsuitable structure
and low capacity of the regulatory institutions, or the conflict
between legislative and executive branches in the government. All
are present in Sri Lanka. The Central Transport Board regulates
RTCs and provides them in-kind subsidies in the manner of its past
role as the monopoly service provider of road passenger transport
for the whole country. It has a staff of 3,500 and a (1999) budget of
Rs 1,500 million (US$23 million). The Western Province Road
Passenger Transport Authority regulates private operators, albeit
weakly, and it has no capital budget. By law, it also should regulate
RTCs, but the law is not followed, and could not be followed with-
out the leverage of a budget and expanded institutional capacity.
Fares are deregulated by law, but the law is disregarded at the
national government level. Both the regulatory system and the
executive practice need an overhaul.
Transportation Research Record 1799
The problems on the road traffic side are no less serious than in
public transport. The road infrastructure in the area is underdevel-
oped. It is the strongest in the category of arterial roads of radial
orientation, and quite weak as regards orbital roads, and primary,
limited-access roads, be they radial or orbital. This has both land
use and traffic impacts. Land between radials has remained locked
up, encouraging outward development. Since commercial and other
high-activity land uses were allowed on the existing arterial roads,
and the frontage roads are few, the former have lost much of their
potential speed and volume capacity. The traffic is chaotic, which is
a normal consequence of mixing very diverse vehicle types (buses,
motorcycles, cars, three-wheelers, bicycles) on undivided, limited-
width roadways, and permitting direct access to roadside activities.
Traffic exhibits signs auguring of saturation: travel speeds of
5 km/h on the busiest road corridors during peak hours, with a stop-
and-go operation. Air pollution is not a serious problem in the short
term, but may become so, in part because the high differential in
petrol and diesel retail prices is driving the sales and use of diesel-
propelled vehicles. Parking is unregulated, which poses serious
problems in central Colombo and all lower-order activity centers.
Traffic lanes get to be blocked by double parking, vehicles parking
on pavements and entrances, and so forth. As usual, bicycle riders
get the worst end of this situation, which may explain the low use
of bicycles relative to a high ownership rate. Pedestrians also get
short shrift, especially at street crossings. Frequent and randomly
placed police blocks and lane closures, applied as a security mea-
sure in the ever-threatening civil strife, add to delays and poor
reliability in daily travel.
The underlying causes of traffic problems on the road side com-
bine topographical constraints of the region, unresolved issues of
land ownership and development, public policy stressing universal
access (as opposed to road system design balancing movement and
access functions), and a divorce of user charges from the road fund-
ing process. The problem of locked in land notwithstanding, the
road development policy focused on access has run its course. It is
time to turn a more favorable eye to the movement function, that is,
the creation of a hierarchical road network for the region. This
places the issue of road pricing and funding on a critical path to
achieving an improved road system. The current fuel and vehicle
taxation is a revenue generator for the national treasury, not a road
use charge. The charges and taxes are high and not well related to
the amount of use, contribution to road wear and tear, and traffic
congestion. Nor are they related to the site-specific budgets needed
for traffic operations management, and maintenance and expansion
of roads.
The potential for much more serious transport problems in CMR
over the longer term is high. Were the civil war to end and the econ-
omy of Sri Lanka to accelerate to East-Asian growth rates of the
early 1990s, with the usual concurrence of increased motor vehicle
ownership and use, the center of Colombo and its major road arter-
ies would lock up. The congestion affects the street-based public
transport services faster and to a greater degree than it does the rest
of the traffic. This would be especially deleterious in Colombo,
given the absence of reserved rights-of-way for public transport
vehicles. The traffic restraint measures may help somewhat, but
have only a small amount of potential because the transport system
is so constrained on all sides. Anticipating that these external and
positive events will take place, it is important to act so that transport
does not become a bottleneck to economic growth of the region and
its role as the country’s gateway to the world.
Mitric
TOWARD A TRANSPORT
DEVELOPMENT STRATEGY
The starting point in strategy making is to state the selected framing
of the problem in hand and its political and economic surround (5).
The wider context for an urban transport strategy in CMR is that of
a developing country known for its successes in equitable develop-
ment, but lagging in economic growth, hence also lagging in poverty
reduction. One of the reasons for the slow growth is the barrier rep-
resented by the public sector of the economy, with its protected
employment and low productivity. A parallel context is that of a
dominant national government with an oversize civil service, under
pressure to decentralize, with a 17-year civil war as an all too painful
and costly reminder how strong the urge is for greater regional and
local rule. The narrow context for the strategy is that of having to
manage the advancing motorization, which both threatens and
makes imperative the existence of good-quality public transport ser-
vices. Balancing the interests of these two modes is difficult to
achieve on the small amount of road infrastructure available in the
region. The objective of having good-quality transport services also
clashes with the objective of keeping public transport affordable to
low-income people.
Next in the strategy-making process, highly recommended but
routine actions need to be separated from the truly strategic ones.
The routine actions typically involve a well-established best prac-
tice, with time-tested results. There are no complex choices involved
and no irreversible decisions, merely a political will, a steady com-
mitment of resources to budget standard-type institutions, a conti-
nuity of effort, and a habit of attending to the details. Traffic man-
agement, whose continuation and intensification were highly
recommended by CUTS, is one of the main routine activities in the
urban transport sector. Other highly recommended routine activities
include
• Establishing an active link between traffic management activ-
ities and the traffic law enforcement efforts, to increase traffic safety
and move traffic better;
• Introducing parking management, including charges, which
may stimulate private investment in off-street parking; and
• Introducing a pavement management system to maximize the
benefits of any given road maintenance budget.
It is also a routine matter to recommend the use of private con-
tractors to design traffic management schemes, operate the park-
ing system, or carry out maintenance activities. Finally, in a city
in which pedestrians, bicycles, and several classes of motorized
vehicles compete for the very scarce street space, it should be a
routine matter to adopt design standards and practices suitable for
the local situation. This means providing for sufficient sidewalks
and safe crosswalks on all roads, walk-only areas in activity centers,
separate lanes whenever possible on existing roads, and the sepa-
ration of local traffic from through traffic on all new arterial and
limited-access roads.
The truly strategic urban transport decisions in CMR have to do
with resolving six issues:
1. Organization and regulation of public transport services;
2. Fare policy with respect to low-income passengers;
3. Destiny of public-sector operators;
4. Development of mass rapid transit services;
5. Road expansion with reference to pricing of road use and
funding roads; and
Paper No. 02-4106 69
6. Intergovernmental relations, as they reflect on the design of
urban transport institutions.
A high-quality strategy-making process would define attractive
options in each one of these six categories, use the options as build-
ing blocks of alternative strategic packages, evaluate these against
a set of predefined criteria, and present outcomes for the considera-
tion of the decision-making body. In this particular case, the process
was compressed to selecting a strategic package against an implicit
“continue as before” alternative, but allowing for some variations to
remain in the package. The recommended strategy is described in
the next sections.
Regulation of Road-Based Public Transport
Services Should Follow the For-Market
Competition Approach
The current weak regulation of private bus operators, the over-
regulation of public-sector bus operators, plus an even more distant
Sri Lanka Railways, with three different sources of authority and
only a predatory type of competition, should be replaced by a unified
approach based on regulated competition. The link between the
Central Transport Board and RTCs would be severed. One region-
wide passenger transport authority would set service standards for
routes or groups of routes, allocate them to operators based on com-
petitive bidding and multiyear service contracts, and monitor the
performance of operators. The existing Western Region Road Pas-
senger Transport Authority would be strengthened considerably,
with regard to legal powers, staff, and a capital budget to pay for the
difference between fare revenues and contractual payments to oper-
ators, if any. In anticipation of this authority’s role being extended
to rapid transit lines, including the suburban rail services, the word
“road” should be excised from its current name.
For road-based passenger transport services, the pool of eligible
bidders would consist (ultimately) of route associations of private
operators plus any restructured RTC, whether or not on the way to
privatization, or already privatized. When tendering a first route or
set of routes however, it would be preferable to limit the tender to
private bidders only—this would ensure that a viable private-sector
benchmark exists alongside RTCs. At the outset also, a gross-cost
contracting approach (wherein fare setting and all revenue risk is
taken by the transport authority) would be used to eliminate the
predatory conduct of operators seeking to maximize revenue and
to lodge the full responsibility for the consequences of the fare pol-
icy there where the policy is made. Depending how quickly this
consistency-inducing mechanism works, gross-cost contracting
would be gradually and selectively replaced by shifting revenue risk
to operators. The transition from the current system would be done
using a pilot approach, starting with a major route or a group of
major routes.
A do-minimum alternative to the recommended for-market com-
petitive approach would be to opt for an amended in-market com-
petition. All revenue risk would be left to operators, with or without
privatizing RTCs, but with an improved regulation of fares, or no
fare regulation whatsoever. These alternatives would be easier to
implement, being incremental to the status quo, and may involve no
significant expenditure of public funds. They may also lead to ser-
vice improvements, but these are difficult to sustain and have many
negative side effects. At an extreme, retaining only vehicle and driver
licensing and safety standards (i.e., total deregulation) has been
70 Paper No. 02-4106
tried, but has failed in essential terms of congestion, safety, pollution,
modal shifts, and exclusion from service (6).
Social Assistance to Low-Income and
Other Deserving Passengers Should Be
Separated from Public Transport Fare Policy
The policy of maintaining general fares low so as to assist the lowest-
income citizens should be abandoned in favor of targeted assis-
tance. Targeting is not foolproof against benefit leakage, but would
move social policy design and implementation concerns where they
belong—to agencies specialized for social assistance. For some
classes of travelers, the most efficient method of providing targeted
assistance is through discounted public transport fares. This is
acceptable, subject to a rigorous approach to paying a compensation
to the transport authority by the branch of the government that
orders the subsidy, as it is now paid to RTCs for schoolchildren and
student fare discounts, and for operations on rural routes.
The general fares in CMR should aim for full cost recovery, a
goal achievable in the short to medium term for the road-based
urban transport services, and in the medium to longer term for the
suburban rail services. The financial gap of RTCs is still moderate,
and speed is of essence in this matter. Accepting as the starting point
the current practice (not the current Sri Lanka law) wherein the gov-
ernment sets fares, and in line with using gross-cost contracting in
the initial stages of the regulatory reform, general fares for the ini-
tial round of competitive route tenders should be set against an
explicit consideration of possible revenue losses to the transport
authority and its budget capacity. That is, for any desired level of
service specified in tender documents, general fares should be set
with the intent of balancing the authority’s accounts from the sum
of fare revenues and the authority’s budget. The intention is first to
bring the budgetary contribution to zero over a time period of about
2 to 4 years, with the length of the adjustment period dependent on
the wage movements. Then, gradually, to reap full benefits of com-
petition, fare and revenue risk should be passed to operators by mov-
ing toward net cost contracting. The process of balancing the books
will require an increase in public spending in the early years, to be
followed by gains from the reduction of subsidies and the competitive
process.
Public-Sector Operators (RTCs) Should Be
Allowed to Compete Under
New Regulatory Structure
The public sector has an important, indeed essential role to play in
setting service standards, in the contracting process, in monitoring
performance, and in managing the fare and subsidy equation. On the
other hand, a continuing public operation or ownership of bus fleets
is not a necessary part of this role, and has not been found in other
countries to deliver on its promise of high service standards and cost
efficiency. It can be said with confidence that, in CMR, a desired
direction for the long term is an all-private provision of passenger
transport services. This said, the strategy must address the reform
path from the current arrangement, wherein there is still a strong
public sector operation. The political mood reflects fatigue with past
attempts at massive reforms, not to mention the interests vested in
public-sector employment. Indeed, an outright privatization or liq-
uidation of RTCs, even if shown as warranted through an exercise
Transportation Research Record 1799
in regulatory cost-benefit analysis, could not take place under the
current labor protection laws. The proposed approach therefore
includes a continued existence of public-owned operators, restruc-
tured as commercial enterprises initially in public ownership.
Except for the initial rounds of service tenders (as noted above),
RTCs would be allowed to bid for service contracts, with a threat of
liquidation only if they are not successful. The experience with this
approach, in London, for example, shows that some public-sector
companies manage to hold their own against private competitors,
and also that successful ones opt to move rapidly toward privatiza-
tion. An alternative would be to leave RTCs outside the competitive
bidding system, while relaxing fare regulation, improving compen-
sation, and allowing staff cuts in line with the size of the operational
fleet. This, however, would mean the continuation of two regulatory
regimes and is not recommended. The worst alternative would be to
continue the current process of bleeding these companies gradually
through disinvestment, at high and increasing direct and indirect
costs to the public treasury. This inevitably would lead to privatiza-
tion or liquidation, but at a vastly lower sales or salvage price. An
example of this last, very undesirable “business as usual” approach
is the progressive destruction of urban services of Punjab Road
Passenger Corporation in Lahore in the 1990s.
Planning for Mass Rapid Transit Should Focus on
Exclusive Right-of-Way, Wherever Found
Given the absence of reserved street space, the proposed regulatory
reform would not suffice to ensure high-quality public transport ser-
vices in CMR beyond the short term, and especially not if economic
growth takes off. What is needed for high-volume, high-quality pub-
lic transport, in addition to a sound regulatory framework, is a sep-
arate and preferably exclusive right-of-way. By definition, mass
rapid transit modes, exemplified by metros, operate on a fully exclu-
sive right-of-way, free of interference from parallel and cross traf-
fic streams. Under conditions of road space scarcity prevailing in
Colombo, it is not likely that some of the existing street space can
be taken from other vehicles and assigned to public transport for its
exclusive use. In CMR, just two options appear promising and real-
istic for the public transport system to evolve from mixed-traffic
operation toward rapid transit. The first of these is to provide
reserved public transport lanes on any and all roads that may be built
anew, or reconstructed with an expanded cross-section. Once
reserved right-of-way is available, the right to provide transport ser-
vices thereon would be tendered as described above for street-based
lines, with the advantage that the revenue risk could be given to the
operator straightaway. It is not necessary to specify at this point
whether bus or rail technology would be used for rapid transit, this
being subject matter for detailed studies in any given corridor.
The second option for achieving mass rapid transit in CMR is to
realize the tremendous potential of the suburban rail network, cur-
rently four radial lines on some 215 km of reserved space. This is
the main transport hope of CMR. These lines and the rolling stock
should be gradually upgraded and expanded (again, this does not a
priori exclude the possibility of changing vehicle technology in any
one of its corridors, such as substituting buses for rail cars). Upgrad-
ing the suburban rail system should be coupled with a land devel-
opment initiative, to maximize gains from superior access to hinter-
lands of the suburban stations. Given that the current operations of
the suburban lines exhibit all and worse symptoms of poor services
and deficit financing described for RTCs, for this option to succeed
Mitric
it is essential for the government to implement a regulatory reform
similar to that recommended for the street-based bus operations. The
main difference would be that the funds for restructuring and
upgrading the suburban lines would be substantially higher than for
RTCs, given the state of the rail infrastructure, power lines, and sig-
naling. This would call for private financing or cofinancing, and for
drastic changes in fare structure and fare levels to make the invest-
ment attractive. The difficulty with this option is that the suburban
services currently are not separate and independent, but an integral
part of the Sri Lanka Railways, which as a whole needs consider-
able reforms (2). Given that reforming large, state-owned railway
companies has been a difficult and lengthy experience, it is in the
interest of CMR to have the suburban lines unbundled from the rail-
way company, given a new ownership profile with strong regional
and private participation, then rebuilt and reformed to suit regional
transport and land use goals.
Investing in Road Expansion Requires
New Approach to Funding and Road Use Pricing
Acknowledging that the land available for the expansion of the pri-
mary road network in CMR is of a small amount, but knowing that
the current road infrastructure will not suffice to carry the load of
future economic growth, the recommended investment strategy is to
(a) upgrade the existing major radial roads in eight corridors to pro-
vide elements of limited access as well as channels for local and
nonmotorized traffic and public transport vehicles; and (b) invest in
new arterial roads of the orbital type, in support of a polynuclear
growth concept adopted in the 1998 structure plan, and to provide
access to undeveloped land, now locked up between radial roads.
Whether any of these will be built, and in which order of priority,
depends on the funding element of the strategy, presently missing
from all propositions. This is where the road strategy for CMR
depends on the national reform of road use pricing and road fund-
ing. On the national level, the present, fiscally oriented taxation of
vehicle importation and fuels should be replaced by a system of road
use charges reflecting road and social costs by vehicle type. The pro-
ceeds would be earmarked for a road fund. The opportunity of
reforming the national road pricing and funding system should be
used to make that system a platform for a complementary system for
regions and cities. The current funding method for road develop-
ment in Sri Lanka, from the general budget, may have served rea-
sonably well in the period of providing basic access countrywide.
This stage of development is over. The funding method is no longer
suitable because traffic growth, congestion, and pollution in urban
areas require that prices be used as transport policy tools on a local
scale, especially for modal split management. Increasingly, roads
should be treated in a manner analogous to treating utility compa-
nies. The fact that nationally aggregated earnings from fuel and
vehicle ownership taxation in any one year exceed aggregated road
expenditures does not mean that road utility recovers its social costs.
Cost recovery for roads has to be looked at in local terms, leading
eventually to congestion pricing, in some form. The time is coming
when local road network expansion can only be made if the current
road use is priced at social cost, and additional local revenue is fore-
cast to be able to match the additional, all-inclusive costs. What
these days is done for toll expressways in many large cities will in
the future be done for entire urban road networks.
Paper No. 02-4106 71
Regional Transport Development Strategy Calls for
Strong, Regionally Based Institutional
Arrangement for Transport
The municipal governments in CMR, under their existing powers,
are only capable of traffic and parking management, two essential
but routine activities. Even carrying out these functions effectively
will require a cumulative process of institution building at the
municipal level, even in the most developed municipality—the city
of Colombo. Improvements will also be needed in local revenue
mobilization and resource allocation.
For the regional public transport services to change in line with
the above strategy, it is recommended, as discussed earlier, to
change and strengthen the existing public transport authority, pro-
vide it with a requisite budget and staff, and empower it to carry out
the rest of the regulatory reform. Likewise, for the regional road sys-
tem to be well maintained, efficiently operated, and expanded, so as
to meet social objectives and constraints, the Western Province
Road Development Authority must be strengthened, in addition to
the funding changes cited above.
It is a valid question to ask whether pursuing parallel but separate
development of the existing sectorial institutions will suffice for
detailing and pushing through a regional transport strategy that cuts
across different modes. The answer is that it is probably not suffi-
cient. A strategist institution, a CMR transport authority empowered
and endowed for the scale and importance of this task, will be
needed in the longer term.
ACKNOWLEDGMENTS
The author wishes to acknowledge the contributions of Amal
Kumarage and M. B. S. Fernando, both from Colombo, who did the
field work on which this paper is based. World Bank colleagues Ken
Gwilliam, Juan Gaviria, and Zhi Liu provided valuable comments.
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The views and opinions expressed in this paper are those of the author and should
not be attributed to the World Bank, to any colleagues of the World Bank, or to
its affiliated organizations.
Publication of this paper sponsored by Committee on Public Transportation
Planning and Development.