The economics and politics of road toll in Maharashtra

Of MSRDC’s 50 stations, 20 are for projects executed on a BOT basis, and rest for projects on cash contracts where corporation has to recover cash and interest.

Mumbai | Published: January 28, 2014 1:54:04 am

The collection of toll on Maharashtra’s roads, the cause of heartburn among many commuters and the trigger for Monday’s vandalism by MNS workers, is vital to sustaining the road network in a state that has approved 137 privatised projects worth Rs 15,220 crore since 1989, when it became the first in the country to adopt the toll model.

If the government were to accede to the demand to stop taking toll, the burden on the state exchequer on account these projects would be in excess of that amount, and Rs 15,220 crore is over five times the size of the annual state budget for road works. The calculation for toll factors in various elements, including a profit margin for the contractor, which take the targeted collection beyond the actual project cost.

Road toll fetches Rs 750 crore every year, government sources say. As of today, 169 toll stations are in operation in the state. On Sunday, Chief Minister Prithviraj Chavan and PWD Minister Chhagan Bhujbal defended toll-based road contracts. And far from scrapping the model, the government plans to offer more toll-based contracts in the near future, senior functionaries said.

As such, the demand for toll-free roads comes across to the officials as “nothing but a lame poll prank”. With polls round the corner, the BJP-Shiv Sena alliance announced this month that it would make Maharashtra “toll-free” if elected to power, a stand backed by the Swabhimaani Shetkari Sanghathana, a political organisation with a following among Western Maharashtra farmers and which has now tied up with the BJP-Sena. On Sunday night and Monday, exhorted by their leader Raj Thackeray, MNS workers joined the bandwagon by vandalising booths in eight cities as well as Mumbai’s suburbs.

The 137 projects cleared since 1989 have a combined length of 4,685 km, just 2 per cent of Maharshtra’s total developed road length of 2.42 lakh km. Most projects have been awarded on a build-operate-transfer basis, with a few on cash contracts. Of these, 106 projects collectively worth Rs 3,337 crore and covering 2,400-odd km have been completed so far.

Lack of transparency is among the key arguments of those who oppose toll collection. “There are no clear documents on the expenditure, projected toll collection for the stipulated period and what criteria are used to decide the collection period,” said Vishwambhar Chaudhari, an activist in Pune who had joined Anna Hazare in a delegation to the chief minister in 2011.\

The government has since worked out a new toll policy that proposes to make such contracts more transparent. The proposed provisions include display of collection details at booths, monitoring of traffic flows with digital meters and by government staff, and a police chowki at each booth. All contracts would be e-tendered and the toll would be based on the length of the road, with allowances for annual fluctuations, and with no two booths more than 45 km apart.

On Sunday, Chief Minister Chavan said, “Since no public hearing is taking place and the process of toll is not transparent, there is some anger among the people. (But) if toll is not collected, highways will not be built. There should be a regulatory authority.”

The same night, Raj Thackeray exhorted MNS workers, “If someone stops you, thrash them.” Hours later, the violence broke out.

Government officials cite a “misconception” about citizens being exploited, with few aware how the toll is worked out. Once a toll-based road project is complete, the contractor or the concerned government agency can charge the toll to recover the project cost. Beyond the actual of construction, the calculation factors in the cost of surveys, maintenance, land acquisition and interest on finances, besides the contractor’s profit margin.

The government stresses the gains from the toll model. “Good roads have led to increased traffic speed, reduced commuting time, saved fuel expenses, reduced environmental pollution, decreased road accidents, encouraged industrial and township development,” a presentation prepared by the PWD says.

Of the 137 projects, 19 worth Rs 6,848 crore involve viability gap funding by the government. While the existing norms have provisions allowing the government to retain 75 per cent of the amount recovered from vehicles in excess of estimated projections, sources said the government is yet to exercise that option.

Of the 169 booths, 79 come under the PWD, 50 under the Maharashtra State Road Development Corporation and 40 under the National Highways Authority of India.

Of the MSRDC’s 50 stations, 20 are for projects executed on a BOT basis, and the rest for projects on cash contracts where the corporation has to recover the cash and interest.

The BOT contracts include projects for development and improvement of the Mumbai-Pune Expressway and the Mumbai-Pune National Highway. The concession period ranges from 11.8 to 19.4 years, the longest being for the Pune’s Baramati integrated road project.

For nine toll stations in Kolhapur, the concession period is 30 years on a Rs-420-crore integrated road development project. This has, however, been put on hold following violent protests there. For such cash contract models, the MSRDC awards three-year contracts.

Inputs by Sushant Kulkarni in Pune

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