Govt’s plan of limiting toll collection faces resistance

September 26, 2014

Currently, the toll rates are typically brought down to 40% of the ongoing toll rate after the end of a concession period. Photo: Mint New Delhi: Roads minister Nitin Gadkari’s promise of limiting toll collection to recover project cost is facing resistance on grounds that it will add to the fiscal burden of the government. Officials in the road ministry and National Highways Authority of India (NHAI) have pitched to make a presentation to the minister to explain why the proposal is not feasible. “We have asked the minister to let us explain why stopping toll collection after recovering the project cost may not be desirable,” said an official who did not want to be identified. “Money collected through toll after the end of the concession period is used to maintain national highway projects.

Usually these are good stretches and cost of maintenance is high and there aren’t enough funds with the government to ensure maintenance of these stretches without the toll money,” he added. Currently, the toll rates are typically brought down to 40% of the ongoing toll rate after the end of a concession period. Concession period is the duration for which a developer is given the contract for tolling a road project for recovering the cost of construction and maintaining it, and typically ranges between 20 and 30 years. “The tolling policy is very vague. It needs to be revisited for many reasons like defining what constitutes the cost of construction and why some stretches are tolled and some not,” said a second official, who too requested anonymity.

“However, the toll that is collected after the concession period is used for maintaining and cross-subsiding other national highway stretches that cannot be tolled. If this is removed where will the money for maintaining the national highway network come from?” Gadkari first spoke of stopping the collection of toll once the cost of a project is recovered in the Lok Sabha on 14 August. Addressing a conference on 100 days of the National Democratic Alliance (NDA) government on 15 September, Gadkari reiterated his keenness to go ahead with the proposal. The remarks come in the backdrop of several instances of protests against toll collection.

Road ministry officials are exploring alternative, acceptable solutions for resource mobilization that could at least address the resentment of the local residents. “One of the suggestions is to toll only the commercial traffic after the cost of the project is recovered as anyway 80% of the toll collection comes from the commercial traffic. However, all this is at an initial stage,” the first official said. The National Highways Fee (Determination of Rates and Collection) Rules formulated in 2008 are in force currently.

“The tolling strategy needs to be relooked at, keeping in mind the issue of the local users. More importantly the issue of collecting toll until perpetuity for stretches without providing an alternative free route to users who may not wish to pay also needs to be addressed,” said Pranavant, senior director at Deloitte Touche Tohmatsu India Pvt. Ltd, an audit and consulting firm. He uses a single name. The move, when first suggested, had been criticized by the industry too on grounds that it could make it difficult for the developers to access bank finance.

Source:live mint

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