German Truck Toll System on the Road Again

Emerging from Sunday's breakthrough negotiations, German Chancellor Gerhard Schröder called the new deal a "balanced compromise."

Two weeks ago, the government backed out of its contract with the consortium of companies, including German-U.S. auto giant DaimlerChrysler and German telecommunications heavyweight Deutsche Telekom following months of incessant technical hitches and delays. But now, the project is back on track after the consortium agreed to key concessions on questions of liability and penalties for breach of contract.

Schröder stressed he hadn't lost faith in the high-tech, satellite-supported toll system despite an embarrassing and costly series of delays to its launch, which was initially supposed to take place in mid-2003. "We want to -- and we will -- demonstrate to Germany, Europe, and beyond, that Germany is a center of innovation capable of successfully implementing this system," Schröder said.

Changes at the top

The new, improved Toll Collect venture sees Deutsche Telekom absolving DaimlerChrysler of the leading role in the project. The consortium now includes another giant of German industry, Siemens, which has taken on responsibility for technical coordination of the on-board units which are installed in the trucks.

Also central to the new agreement are changes increasing the consortium's liability in case of breach of contract. The companies have guaranteed that a scaled-down version of the system will be operational by Jan.1, 2005 to begin collecting tolls. Failure to comply could result in a fine of up to €780 million ($975 million). As of Jan.1, 2006, the companies face unlimited liability.

An arbitration court is to settle the issue of revenue losses estimated at €3 billion already incurred by the government because of delays to the start of the system.

"It seems as if Daimler's being taken out of the crossfire as they've moved into the background behind Telekom and Siemens," a Frankfurt analyst told Reuters on condition of anonymity. "In arbitration court, I expect the government to go easy on the consortium. Politically, they can't afford to kick their partners too hard in the shin."

Market analysts remain sceptical

Despite the government's assurances that, this time, Toll Collect will deliver, investors don't appear to see the new agreement as a guarantee of the project's success. Share values of consortium firms DaimlerChrysler, Deutsche Telekom and Siemens barely moved in reaction to the news, gaining around one percent on the German stock exchange, the Dax.

"When the first truck drives under one of the toll bridges and the coins start to rattle in the finance minister's pockets, that's when I'll believe in the system. But not before," said Stefan Müller, a trader with the investment bank Sal.Oppenheim.