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Highway cess may be bumped up

Increased tax on fuel, higher toll is being mulled by the Govt to raise money for maintenance, report Deepak Joshi & Gaurav Choudhury.

india Updated: Nov 25, 2007 20:51 IST

The government is exploring the possibility of increasing the cess on petrol and diesel by another 30 paise a litre to raise funds for maintaining national highways and state roads. <b1>

The move is necessitated by a severe resource crunch for maintaining highways developed during the early phases of the National Highways Development Programme (NHDP).

Estimates show that Rs 3,750 crore will be required every year, at current prices, between 2006 and 2010 for maintenance of these newly laid roads and expressways. Initially, it was assumed that one-third of the funds collected through the fuel surcharge would be used for maintenance. However, the entire allocation has already been committed to construction.

“A fresh imposition on fuels is expected to fetch Rs 2,000 crore at current prices and this is one of the alternatives being looked at for maintaining highways,” senior government officials said.

The government at present collects Rs 2 a litre as cess on diesel and petrol, often referred to as the highway cess.

However, with global crude oil prices galloping towards $100 a barrel, the government may look at alternative means of fund raising. One of which entails bidding out stretches on maintenance-cum-performance contracts with rights to collect toll.

“The revenue collected from the maintenance toll will be used for maintenance of those national highways on which the toll is collected. Toll rates may be worked out on the capacity of the users to pay, traffic density and the requirement of funds,” the officials added. <b2>

Besides considering these options, the government may opt for higher toll rates on expressways than on four- or six-lane highways.

For instance, toll on the proposed Taj Expressway could be much higher than on the existing Delhi-Agra highway, officials pointed out.

They said private parties may be given rights for commercialisation of areas along expressways. “This could be on the lines of what the Uttar Pradesh government is planning on the Ganga Expressway from Greater Noida to Ballia,” they said.

First Published: Nov 25, 2007 20:48 IST