Construction and operation of the vehicles inspection program
Construction and operation of the vehicles inspection program
Business Model Description
Implement the National Vehicle Inspection Program through a public-private partnership for the construction and operation of inspection centers and mobile units that allow the registration of the conditions of vehicles nationwide.
Expected Impact
Technical vehicle inspections will increase road safety, reduce the risk of traffic fatalities, and improve air quality.
How is this information gathered?
Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.
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Country & Regions
- Cibao Norte
- Cibao Sur
- Cibao Nordeste
- Cibao Noroeste
- Valdesia
- El Valle
- Enriquillo
- Yuma
- Higuamo
- Ozama
Sector Classification
Infrastructure
Development Need
1) According to the World Economic Forum, the country ranks 79 out of 141 countries in terms of infrastructure quality. 2) The Inter-American Development Bank estimates that the Dominican Republic needs to invest around 5% of annual GDP in infrastructure to close the gap with its regional peers (1).
Policy priority
The country established investment in infrastructure as one of its top policy priorities. Priority projects include the construction of roads, bridges, airports, ports, mass transportation systems, and power grids (2).
Gender Inequalities and Marginalization Issues
The lack of measures to address barriers women face in the infrastructure sector, such as discrimination and harassment, lack of opportunities, education, and training, can limit the country's ability to attract and retain female workers and limit the quality and diversity of perspectives in the sector.
Investment Opportunities Introduction
The government implemented initiatives to encourage private sector participation in the financing and construction of infrastructure, including public-private partnerships and concessions (2).
Key Bottlenecks Introduction
Limited availability of financial resources constrain the country's ability to successfully implement projects.
Land Transportation
Development Need
The public investment in transportation has been low for several years, causing low quality land transportation infrastructure and vehicles (3).
Policy priority
The National Development Strategy 2030 establishes as a priority to expand coverage and improve the quality of transport and logistics infrastructure and services, orienting them to the integration of the territory, the support of productive development and competitive insertion in international markets (4).
Gender inequalities and marginalization issues
The lack of infrastructure results in high costs for rural communities, due to the longer distances they must travel to access goods and services. This subsector promotes new businesses and hinders the efficiency of existing ones (5). Currently, the country loses 40 per cent of optimal human development due to existing gender inequalities (6).
Investment opportunities introduction
The National Infrastructure Plan prioritizes investments in the following sectors: Transport, Energy, Water and Sanitation, Solid Waste, Telecommunications, Water Resources and Irrigation, Health and Education, having a total of 1,334 investment programs and projects totaling USD 37,724 million (7)
Key bottlenecks introduction
There are funding constraints, making it difficult for the private sector to participate in infrastructure and transport. Sustainable financing alternatives or funds guaranteed by multilateral institutions (7).
Engineering and Construction Services
Pipeline Opportunity
Construction and operation of the vehicles inspection program
Implement the National Vehicle Inspection Program through a public-private partnership for the construction and operation of inspection centers and mobile units that allow the registration of the conditions of vehicles nationwide.
Business Case
Market Size and Environment
5 millions motor vehicles in the Dominican Republic (11)
By the year 2022, the vehicle fleet of the Dominican Republic amounted to 5,463,996 units with an average annual growth rate of 6%. Nowadays, 56.1% of motor vehicles are motorcycles, followed by automobiles (19.9%), Jeeps (11.4%), cargo (9.1%) and others (3.6%) (11).
Indicative Return
20% - 25%
The business model relies on a user fee of US$25 per vehicle inspection, which is adjusted based on the exchange rate. The first batch of vehicles to be inspected is expected to cover 60% of the country's vehicle fleet (12).
According to the establised PPA to implement the technical vehicle inspection establishes that total revenues would be shared, with 97% allocated to the investor and 3% to the State in a public-private partnership. The cash flow estimation indicates an internal rate of return on investment at 23.44% (12).
Investment Timeframe
Medium Term (5–10 years)
Given the construction period of less than two years and a 15-year operation contract term, it is anticipated that the investor will recover their investment within 6 years, considering the estimated internal rate of return ranging between 20% - 25% for the first lot of inspections (12).
Ticket Size
> USD 10 million
Market Risks & Scale Obstacles
Market - Volatile
Capital - CapEx Intensive
Impact Case
Sustainable Development Need
Every year in the Dominican Republic 3,000 people die as a result of traffic accidents, placing the country in the top 5 countries with the highest mortality rates (14).
In the province of Santo Domingo, 20% of CO2 emissions come from transportation (15). This is relevant because 38.64% of the national vehicles fleet are from this province (14).
From a general perspective, the transportation sector in the country is one of the largest sources of emissions with a total of 8,000 Gg CO2e in the period 2010-2014 (16).
Gender & Marginalisation
In 2020, 86.5% of the accident victims were men, and 13.5% were women. Men exhibited an average accident rate seven times higher than women. The most vulnerable age group for traffic accidents was individuals between 15 and 39 years old, accounting for 59.2% of the total victims that year (14).
Expected Development Outcome
Increase road safety to reduce the number of road accidents and the number deaths caused by traffic accidents.
Contribute to the reduction of greenhouse gas emissions produced by the transportation sector
Gender & Marginalisation
Reduce the number and risk of deaths caused by traffic accidents
Primary SDGs addressed
3.6.1 Death rate due to road traffic injuries
In 2020, the mortality rate due to traffic accidents is 25.98 per 100,000 inhabitants (14)
Reduce the traffic accident mortality rate from 13.8 to 6.9 per 100,000 people (2)
13.2.2 Total greenhouse gas emissions per year
For 2015 carbon dioxide emissions in cubic meters totaled 35 million Mt CO2 equivalent (17)
Reduce 25% of the emissions (16)
Secondary SDGs addressed
Directly impacted stakeholders
People
Gender inequality and/or marginalization
Corporates
Public sector
Indirectly impacted stakeholders
People
Gender inequality and/or marginalization
Planet
Corporates
Public sector
Outcome Risks
Increased fiscal and budgetary responsibilities of the citizen owner of the vehicle to pay vehicle inspection fees and minimum operating conditions established by regulation.
Gender inequality and/or marginalization risk: As men are the largest number of drivers, they would be the greatest beneficiaries of the program.
Impact Risks
Increased road safety, reduced greenhouse gas emissions, and improved air quality, thus contributing to national policies that prioritize these benefits.
Increased in traffic fatalities despite vehicle inspections.
Increased in the number of end-of-life vehicles resulting in an increase in the amount of scrap vehicle waste without an effective collection and recycling system.
Impact Classification
What
Reduction of traffic accidents due to vehicle failure and greenhouse gas emissions through technical vehicle inspection.
Risk
Project cost overruns that could affect its implementation progress.
Contribution
Contributes to initiatives to reduce GHG emissions from the motor vehicle fleet and to the creation of new jobs.
Impact Thesis
Technical vehicle inspections will increase road safety, reduce the risk of traffic fatalities, and improve air quality.
Enabling Environment
Policy Environment
National Development Strategy 2030: includes the exercise by the national and local public sector of its functions of regulation, promotion and production of goods and services (4)
The National Policy for Climate Change, promote resources, means, and assistance for the maximizing the potential for reducing greenhouse gas emissions (18).
Financial Environment
Financial incentives: Foreign investors, whether natural or legal persons, have the right to remit abroad, in freely convertible currencies, without the need for prior authorization (24).
Other incentives: Residence Permits for Investment Program, through an agreement with the General Directorate of Migration, having as a prerequisite the Certificate of Registration of Foreign Direct Investment (24)
Regulatory Environment
Law No. 47-20 on Public-Private Partnerships that establishes the regulatory framework that regulates the initiation, selection, adjudication, contracting, execution, monitoring and termination of public-private partnerships throughout the national territory (19).
Law No. 344-43 on Expropriations, which grants the Executive the power to authorize the expropriation of property for duly justified reasons of public utility or social interest (20).
Law No. 63-17, on Mobility, Land Transportation, Transit and Road Safety of the Dominican Republic (21).
Regulation No. 177-18 Organic Regulation of the National Institute of Transit and Land Transportation (INTRANT) (22).
Law No. 64-00 on Environment and Natural Resources which seeks the protection of natural resources, the reduction of their vulnerability, the reversal of recurrent losses due to improper use of the environment and natural resources (23).
Marketplace Participants
Private Sector
Castillo Holding Company S.A., Estación ITV Vega Baja S.A. y Womack Integrated Marketing
Government
General Directorate of Public-Private Partnerships, and National Institute of Transit and Land Transportation (INTRANT)
Multilaterals
IDB
Public-Private Partnership
INTRANT and Consorcio INTEVE
Target Locations
Cibao Norte
Cibao Sur
Cibao Nordeste
Cibao Noroeste
Valdesia
El Valle
Enriquillo
Yuma
Higuamo
Ozama
References
- (1) WEF, 2019. The Global Competitiveness Report 2019: https://www.weforum.org/reports/how-to-end-a-decade-of-lost-productivity-growth/?DAG=3&gclid=CjwKCAjwrranBhAEEiwAzbhNtQLtqatLOGe5D2X8Wqg3FbaHiq1hAezZfeg-pUSfUsTRHIH3IANTshoCqNIQAvD_BwE
- (2) National Multiannual Public Sector Plan 2021–2024. https://mepyd.gob.do/publicaciones/plan-nacional-plurianual-del-sector-publico-2021-2024/
- (3) MEPYD, 2023. Equity and territorial development gaps: Dominican Republic 2021. https://mepyd.gob.do/publicaciones/equidad-y-brechas-territoriales-de-desarrollo-rep-dom-2021 4 ) Law 1-12 National Development Strategy 2030. https://mepyd.gob.do/estrategia-nacional-de-desarrollo-2030/
- (5) JOY 2010. Women in infrastructure works: promoting gender equality and rural development. https://www.ilo.org/wcmsp5/groups/public/---ed_emp/documents/publication/wcms_176254.pdf
- (6) UNDP, 2019. In DR persist the inequalities, according to the Human Development Report 2019. https://www.undp.org/es/dominican-republic/news/en-rd-persisten-las-desigualdades-seg%C3%BAn-informe-de-desarrollo-humano-2019
- (7) MEPYD & IDB, 2020. National Infrastructure Plan 2020-2030. https://mepyd.gob.do/publicaciones/Plan-nacional-de-infraestructura-2020-2030/
- (8) Keall, M. D., & Newstead, S., 2013. An evaluation of costs and benefits of a vehicle periodic inspection scheme with six-monthly inspections compared to annual inspections. Accident Analysis & Prevention, 58, 81-87. https://doi.org/10.1016/j.aap.2013.04.036
- (9) Novoa, A. M., Pérez, K., & Borrell, C.,2009. Efectividad de las intervenciones de seguridad vial basadas en la evidencia: una revisión de la literatura. https://doi.org/10.1016/j.gaceta.2009.04.006 "10) Acharya, P. S., AitBihiOuali, L., Matthews, H. S., & Graham, D. J., 2023. The Impact of Periodic Passenger Vehicle Safety Inspection Programs on Roadway Fatalities: Evidence from US States Using Panel Data. https://doi.org/10.1061/JTEPBS.TEENG-7320"
- (11) DGII, 2023. Vehicle fleet statistics bulletin 2022. https://dgii.gov.do/estadisticas/parqueVehicular/1Informes%20Parque%20Vehicular/ParqueVehicular2022.pdf
- (12) DGAPP, 2021. Evaluation report for the declaration of public interest of a private initiative National Vehicle Technical Inspection Program. https://dgapp.gob.do/wp-content/uploads/2022/02/Informe-Evaluacion-Iniciativa-ITV-Declaracion-de-interes.pdf
- (13) Galván Zacarías, A., Melo Álvarez, O., Alcántara de Vasconcellos, E., 2014. Inspección técnica vehícular en América Latina. https://scioteca.caf.com/bitstream/handle/123456789/793/InspeccionTecnicaVehicular2015-26ago.pdf?sequence=1&isAllowed=y
- (14) OPSEVI, 2021. Road Safety Situation in the Dominican Republic, 2020. https://opsevi.intrant.gob.do/wp-content/uploads/2021/12/INFORME-SITUACION-SEGURIDAD-VIAL_2020.pdf
- (15) INTRANT, 2018. Sustainable Urban Mobility Plan for Greater Santo Domingo. https://www.intrant.gob.do/movilidad/index.php/pmus
- (16) Executive Summary: ¨Third National Communication of the Dominican Republic to the United Nations Framework Convention on Climate Change. https://unfccc.int/sites/default/files/resource/29064815_Dominican%20Republic-NC3-1-Resumen%20Ejecutivo%20TCNCC_low%20%282%29.pdf
- (17) Comisión ODS. Indicator 13.2.2 total greenhouse gas emissions by year. http://ods.gob.do/Indicador/Index/247?fromMenu=True
- (18) Decree No 269-15 National Policy for Climate Change. https://cambioclimatico.gob.do/phocadownload/SobreNosotros/MarcoLegal/DECRETO%20269-15%20POLITICA%20NACIONAL%20DE%20CAMBIO%20CLIMATICO.pdf
- (19) Law 47-20 on Public-Private Partnerships. https://dgapp.gob.do/wp-content/uploads/2020/09/LEY-47-20.pdf
- (20) Law No. 344-43 on Expropriations. https://drlawyer.com/espanol/leyes/ley-344-de-1943-que-establece-un-procedimiento-especial-para-las-expropiaciones-intentadas-por-el-estado-el-distrito-de-santo-domingo-o-las-comunes/
- (21) Law No. 63-17, on Mobility, Land Transportation, Transit and Road Safety of the Dominican Republic. https://intrant.gob.do/phocadownload/SobreNosotros/MarcoLegal/Leyes/MARCO%20LEGAL-LEY%2063-17%20SOBRE%20TRANSITO,%20TRANSPORTE,%20Y%20SEGURIDAD%20VIAL.pdf
- (22) Regulation No. 177-18 Organic Regulation of the National Institute of Transit and Land Transportation (INTRANT). https://intrant.gob.do/phocadownload/SobreNosotros/MarcoLegal/Decretos/Regl.%20No.177-18%20Reglamento%20Organico%20del%20INTRANT.pdf
- (23) Law No. 64-00 on Environment and Natural Resources. https://ambiente.gob.do/marco-legal/
- (24) Law No. 16-95 on Foreign Investment. https://prodominicana.gob.do/wp/wp-content/themes/ceird/ceirdpdf/Ley-16-95-sobre-Inversion-Extranjera.pdf
- (25) Nazif-Muñoz, J. & Pérez, G., 2018. Revisión del desempeño de la seguridad vial en la República Dominicana. https://repositorio.cepal.org/server/api/core/bitstreams/bef9d200-8f18-48cf-b655-550370007bbf/content