Germany Seeks Toll Collect Compensation

Originally scheduled to launch in August 2003, the satellite system designed by a automaker DaimlerChrysler and telecommunications giant Deutsche Telekom failed and is currently being replaced by a less-sophisticated system.

The system has been plagued with technical troubles -- including problems with the 3,000 roadside terminals for payment, the 150 control bridges and the electronic devices truck drivers must install in their rigs in order to operate within Germany. In addition to the 2003 failure, Toll Collect failed to meet a second deadline last year and has now proposed a simpler system that is planned to go into operation in January 2005.

On Thursday, German Transportation Minister Manfred Stolpe (photo) told parliament the government would seek a settlement with Toll Collect in arbitration, citing "numerous violations of its business contract."

Consortium: claim unwarranted

However, Toll Collect dismissed the demand as "unwarranted" and "unfounded." In a separate statement, DaimlerChrysler officials said that none of the coalition partners had foreseen the delays that would come and that the government knew there were "possible risks involved in the development of the project and its implementation" when it signed the contract.

Members of Germany's main opposition party, the Christian Democratic Union, on Friday backed the companies. "There's a lot of wishful thinking going on here," CDU parliamentary group deputy chairman Klaus Lippold told public broadcaster Deutschlandfunk. The government's contract with the consortium, he said, "was so poorly negotiated ... that Stolpe's bill won't bear any fruit." The politician said that although it was appropriate for Berlin to seek compensation, the contract it signed with Toll Collect excludes any settlements related to debts.

Earlier this year, the Toll Collect consortium, which also includes France's Cofiroute, agreed to pay up to €780 million in penalties a year in case of future delays as well as €1 billion a year if the system fails during operation.

Plugging budget holes

The debacle has proven embarrassing for two of Germany's largest companies as well as the government in Berlin, which had sought to help close its budget hole with the tolls, which were expected to generate €2.4 billion in additional annual revenues for the government.

The government is still working with the Toll Collect consortium, which shuffled its management and is currently developing an alternative system that is targeted to go online in January. Transportation expert Albert Schmidt for the government coalition's junior partner, the Green Party, said the new management at Toll Collect had given "reason for optimism" and the "toll debacle" had likely passed.

However, Schmidt warned, "If the system doesn't work, things will be tough and unappetizing."