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Maharashtra's opaque road projects

Source : BUSINESS_STANDARD
Last Updated: Sat, Nov 17, 2012 19:00 hrs

Maharashtra was one of the first states in India to actively involve the private sector in infrastructure projects. But the state has not displayed the same ingenuity in providing information and insight on the structure of these public-private partnerships or the financials that govern them.

IndiaSpend filed four rounds of Right to Information (RTI) petitions through the last 75 days but got just two responses. Information was sought on the amount of toll collected on the Mumbai-Pune Expressway, the Pune-Nashik highway, the Thane-Ghodbunder road and Thane-Bhiwandi road. Responses were received only for the last two queries. The answers actually beg more questions, show the larger opacity around which such transactions are executed and highlight the need for urgent reforms.

The state of Maharashtra has a road network of 2,41,000 km. The state’s expenditure on roads has increased from Rs 539 crore in 2005 to Rs 2,368 crore.

In 1996, the state government decided to formulate a private-public-partnership (PPP) policy to finance its Road Development Plan (1981–2001), which in turn called for about Rs 26,000 crore of investments. The policy also led to the creation of the Maharashtra State Road Development Corporation (MSRDC) to undertake development of roads and related infrastructure, mostly with private participation.

The projects are undertaken by MSRDC under the ‘build, operate and transfer’ (BOT) basis. In financing BOT projects, developers are allowed to recover investments by collecting toll over a concession period, generally 30 years.

MSRDC, from its date of inception (July 9, 1996), has completed 18 projects, with an estimated cost (final cost, not necessarily the cost when the project was kicked off) of Rs 7,187 crore and actual expenditure of Rs 6,822 crore. According to the Maharashtra Economic Survey, till September 30, 2011, MSRDC’s total toll income from partially and fully completed projects was Rs 5,680.15 crore.

MSRDC has completed some big projects, including the iconic Bandra–Worli sea link, the Mumbai-Pune expressway and the Pune–Nashik expressway.

Now, to facilitate PPP projects, the state government has amended the Bombay Motor Vehicles Tax Act so that entrepreneurs/contractors could collect toll under the BOT agreement. Toll rates vary for different vehicles and are fixed for three years, with a clause permitting an increase of six per cent a year, after three years.

Separate toll rates for projects of up to Rs 20 crore and between Rs 20-75 crore have been finalised by the government. Toll rates for projects worth more than Rs 75 crore are fixed separately.

Dark spots in data
MSRDC is trying to bring about transparency in handling toll stations and has published some information on toll income on its website. But rather than clearing the air, this has made the picture foggier. For example, the total income from the Thane-Ghodbunder road is Rs 9.36 crore a year, according to the MSRDC website.

However, according to a reply received over IndiaSpend’s RTI query with MSRDC, the amount collected was Rs 176.17 crore as of July 1.

It’s quite likely the former figure refers to annual income for MSRDC, while the latter is the toll operator’s cumulative income. But this is not clear from the responses.

Incidentally, the RTI response also says the project costs Rs 240.20 crore, while the amount to be recovered is Rs 640.85 crore. This suggests there was no annual break-up of payouts (at least what IndiaSpend was able to find) to the government by Ideal Road Builders (IRB).

In its RTI response, MSRDC claimed the amount collected was retained by the BOT operator because it would improve the roads at its own cost. The operator has been authorised to collect toll up to December 31, 2020, after which the Maharashtra government would take over operations.

However, the mystery deepens somewhat when one looks at the website of the toll collector, in this case IRB. Take the case of the Thane-Bhiwandi project (not to be confused with the Thane-Ghodbunder one). According to the IRB website, this is worth Rs 104 crore, while the RTI response from MSRDC says the total project cost is Rs 199.64 crore. On concessions, the response received by IndiaSpend says there are no arrangements in place for the transfer of project in case of the Thane–Bhiwandi toll station. The total project cost is Rs 199.64 crore, while the total amount covered is Rs 315.84 crore.

The response also mentions there is no provision to reduce the toll charges if the project cost is met, and the contract remains with the contractor (IRB) until May 13, 2017. Surprisingly, the total amount is not shared with either the Central or the state governments, at least there’s no indication of that here.

Perhaps, the need for private partnerships in developing infrastructure cannot be countered. But surely, there is a need to vastly improve the availability of genuine information, particularly when it involves the payment of infrastructure goods. The first step could be to make available accurate and easily comprehensible information on the toll collected and how funds are flowing.


(Reprinted with permission from IndiaSpend)



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