Highways ministry to auction road toll rights to raise funds

  • Moushumi Das Gupta, Hindustan Times, New Delhi
  • Updated: May 26, 2015 01:04 IST

The Union road ministry is finalising a blueprint to auction public-funded road projects, which have been completed, to domestic and international players for operation and maintenance for a period of 15-20 years, in an attempt to finance its ambitious highway expansion plans.

According to the proposal under works, the highest bidder will have to pay the government the cost of the venture upfront. The buyer would then be given the right to collect toll on the auctioned highway stretch.

The highways ministry is planning to fix eight to 10 times the toll collected now from each project as the upfront payable amount.

“Currently, there are 99 toll plazas on government-funded highway stretches, from where Rs 3,000 crore is generated annually. We want to put around 60-70 % of the toll plazas for auction,” said an official of the National Highways Authority of India.

The NHAI is assessing and preparing an inventory of all such public-funded projects that can be auctioned. The upfront money would be utilised for expanding the highway network. The government has set an ambitious daily target of building 30km of highway over the next four to five years. This would require Rs 1.8 lakh crore, over and above the budgetary support of Rs 1.25 lakh crore.

Officials said the model is a win-win for both the government and investors. “The investor does not have to take either the construction or revenue risk involved with a typical highway project and the NHAI does not have to administer the project,” said an official.

Sources said minister of state (finance) Jayant Sinha is scheduled next month to go to Singapore where he is likely to talk about the proposed model before foreign investors. “The reason why only public funded projects will be auctioned is because it’s the only mode where the right to toll is with the government,” said an official.

Highways minister Nitin Gadkari has been pushing for the model for quite some time in a bid to make the sector self reliant. “Such initiatives would help to reduce the ministry’s dependence on budgetary support by monetising its future revenue,” said a source.
Many overseas investors have shown interest in taking over completed projects but shied away in absence of a clear policy. “This would attract foreign investors who have money to invest for a longer period,” said an official.

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