FOR WHOM THE BILL TOLLS
If amendments to CRF Bill are passed in Parliament, the NHAI will get less funds from Centre, and there could be a rise in toll rates on highways; experts say long-term solution lies in increased public funding
If the Central Road Fund (Amendment) Bill 2017 is passed in the monsoon session of Parliament, the National Highways Authority of India (NHAI) will lose an estimated `2000 crore in funding. The implementation wing of the Ministry of Road Transport and Highways (MORTH), the NHAI might have to compensate the funding cut through user fees collected at toll booths on national highways.
This could mean highway travel could get dearer for both commercial and noncommercial travellers.
In 2015, the National Highways Authority of India (NHAI) received `6885.89 crore from the CRF and generated `6700 crore through user fees from toll booths on national highways. While these two sources of funding are in the same ball park, the NHAI will have to increase its dependence on user fees if the Central Road Fund (Amendment) Bill 2017 is passed.
The bill introduced by Minister for Road Transport and Highways, Nitin Gadkari, proposes to cut the funding given to the development/maintenance of national highways from the Central Road Fund from 41.5 percent to 39 percent. This 2.5 percent cut in funding will be allocated towards the development of waterways in the country.
“The Chennai Bypass is a NHAI funded project and we are struggling to get returns on the project,” says Athipathi, project director at NHAI regional office in Chennai. “All the other highways in the State are still in the contract period,” he says.
The NHAI was launched in 1988 to develop/ maintain/ renovate national highways as a nodal agency under the MORTH. The economic liberalisation which the 90s ushered in saw the nodal agency awarding contracts to private entities to build, operate and transfer (BOT mechanism) roads and collect user fees over an agreed concession period to reclaim the costs incurred along with interest.
The pending legislation, by cutting funding for NHAI, will hamper it from breaking the habit of awarding contracts to private players on BOT basis and charging commissions on the user fees collected by the private players.
According to the National Highways (Collection of Fees by any Person for the Use of Section of National Highways/ Permanent Bridge/ Temporary Bridge on National Highways) Rules, 1997, the government can continue to charge user fees even after the concession period. This means even after the costs of the project are borne and the private entities extract their agreed upon interest, national highways will still have tolls.
Tolls aren’t fair
We contribute to the development of national highways even without using a national highway or paying user fees at the toll booth. Every visit to the petrol station puts money in the coffers of the CRF.
Two rupees from every litre of petrol/ diesel you consume goes to the Central Road Fund (CRF), out of which 41.5 per cent goes towards the development/ maintenance of the national highways.
A 625 km drive from Chennai to the southern district of Tirunelveli will cost you `700 in toll, which will be collected across 12 booths between the two cities.
In just a one way trip from Chennai to Tirunelveli, you will be contributing roughly `34 solely towards the development/maintenance of national highways ( assuming your car gives you 15 km/litre of petrol).
This might seem like a pittance, but through this road cess levied on motor spirit, the government collected 21,054 crores in the 2015 financial year.
The NHAI’s dependence on commissions on user fees is not a healthy trend for its growth as a government body serving the citizens by developing highways.
“Ideally public funding for NH projects will in the long run cost the common man less. Private players only invest to gain from the inevitable increase in traffic that will translate into toll money,” says Venkatesh Athreya, an economist.
Ideally, public funding for NH projects will in the long run cost the common man less. Private players only invest to gain from the inevitable increase in traffic that will translate into toll money
– Venkatesh Athreya, economist