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Brakes on effort to bypass highway formula

Eastern Peripheral Expressway is highway and not bypass,can’t have higher toll,Finance tells Roads

Written by Amitav Ranjan | New Delhi |
December 13, 2011 3:50:31 am

The Finance Ministry has rejected outright Road Transport Minister C P Joshi’s attempt to impose a higher toll on the Eastern Peripheral Expressway (EPE) than that fixed for the Western Peripheral Expressway,a move that would have put the former at a disadvantage against its western counterpart.

Last month,the Department of Economic Affairs asked Joshi’s Ministry of Road Transport & Highways (MoRTH) to explain its change of stance while pushing the Planning Commission’s argument of charging on the EPE a toll 1.5 times that on any national highway.

More so,the DEA said,when the National Highways Authority of India,MoRTH and the Public Private Partnership Appraisal Committee (PPPAC) had reconfirmed several times that the project was not a bypass road but a normal highway and therefore,a bypass toll of 1.5 times the highway rate was not applicable.

“At earlier occasions,MoRTH has emphasised that application of bypass rates to the project is not merited since it is a new highway and application of higher toll rates would result in diversion of traffic to WPE,result in undue benefit to the WPE concessionaire and impact EPE’s viability,” the Department of Economic Affairs wrote on November 4.

“Hence,MoRTH may be advised to confirm that the change in stand now is in public interest. Bypass rates are also not justified on grounds of equity – the per unit rates charged on the EPE would be higher than paid by users on other national highways (costing at similar levels) and other expressways,” the DEA said while commenting on the MoRTH’s fresh proposal to the Cabinet Committee on Infrastructure. The DEA note said that its views were issued after obtaining Finance Minister Pranab Mukherjee’s consent.

Both expressways are 135 km but the EPE is of six lanes while the WPE is of four. The two,together,would form a ring road outside Delhi for channeling non-Delhi bound traffic without entering the national capital.

The EPE,first approved by the PPPAC in May 2007,was scheduled for completion this month but has not been awarded till date for various reasons. Last April,it was approved by the CCI with the direction that the PPPAC decide its toll rate.

Ahead of the PPPAC meeting,Joshi gathered officials of NHAI,MoRTH and Planning Commission adviser Gajendra Haldea on May 10 to decide that the EPE stretch would attract a toll rate 1.5 times that for highways,as is applied on bypass roads,with the “liberty” to the concessionaire to lower the toll to suit the prevailing market conditions.

This decision came despite the Road Transport secretary’s view at the meeting that “EPE has already been declared a national highway… toll rates significantly higher than that of WPE might affect the viability of the project from a PPP point of view”.

The PPPAC decided 10 days later that the normal toll,as applicable to highways,would be charged on the EPE as it had been notified as a national highway. At the meeting,Planning Commission member secretary Sudha Pillai concurred with the PPPAC decision.

Joshi did not relent. He called the same set of officials on August 29 to decide a toll rate of 1.5 times and decreed the proposal be put up for the CCI’s approval.

“As the ministry feels,in accordance with the advice of the Planning Commission that toll rates applicable for a bypass (1.5 times the normal rates) should be made applicable to the EPE,this ministry now seeks a decision of the CCI,overruling the recommendations of the PPPAC to make the 1.5 times the normal rates to be applied for toll,” says the CCI proposal.

Though 24 bidders have qualified,the financial bids cannot be called until the toll is finalised.

“The undue delay in the implementation of the project is also likely to increase the cost of EPE and cost of land acquisition for the project. The delay in the bid process is also likely to adversely affect the bidder interest and impact the project viability,” the DEA said in its note.

The project cost has jumped to Rs 2,699 crore at September 2010 prices from Rs 2,333 crore in May 2007.

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