‘No-way’ state mulls highway tax – Govt planning to levy user charges with private role in collection and maintenance

January 11, 2012

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Calcutta, Jan. 4: The Mamata Banerjee government is working on a plan to levy user charges on vehicles plying on the 14 state highways in Bengal.

If the initiative is allowed to proceed unhindered, it will be a departure for a government that has been allergic to levying or increasing user charges and the first instance of decisive action from within to fight the financial crisis.

The success of the project will depend on a larger issue that is vexing Bengal: industrialisation. The more the industrial traffic, the more the state stands to earn as toll tax.

As the first step, the government is clearing the decks to set up a company under the public works department to look after all the 14 state highways, which in turn will get private players to maintain the roads.

“The company will invite private parties to maintain the roads under a build-operate-transfer (BOT) model. They will be allowed to charge toll tax to recover their investments,” said A.R. Bardhan, the state PWD secretary.

At present, the PWD spends around Rs 200 crore a year on all the 14 state highways. The state government doesn’t collect any toll tax from these highways.

The National Highways Authority of India (NHAI), however, follows the private-agency model to maintain national highways across the country. For example, the NHAI has engaged three private agencies to maintain NH2 between Howrah and Asansol. The three agencies levy toll tax at three points on the stretch — at Dankuni, Palsit and Asansol.

Senior officials at Writers’ Buildings told The Telegraph that the highway decision had been taken to ease some of the financial burden on the state government.

“The PWD spends one-third of its budgetary allocation, which comes to around Rs 200 crore, on maintaining the state highways. The pathetic state of the roads suggests that the department is facing trouble in maintaining the roads because of paucity of funds,” an official said.

As many of these highways will require re-laying, which calls for fresh investments, the government, according to the official, is banking on private players.

States like Maharashtra are also following a similar model for better maintenance and expansion of the road infrastructure.

“For example, Maharashtra has already developed a state road development corporation through which private agencies can play a role. Private agencies maintain state highways and roads and construct bridges and culverts. They are allowed to collect toll tax to recover their investments,” said a PWD official.

He added that Gujarat and Madhya Pradesh had also brought in private players for road maintenance.

The move to collect user charge on state highways has come after months of refusal by the chief minister to tax water and raise power tariff.

“It is a good sign… If she can collect user charges for use of roads, then why not levy water tax or raise power tariff?” asked a city industrialist.

Estimates drawn up by the power department reveal that the combined losses of the power utilities in this financial year will be around Rs 2,400 crore.

“We see a ray of hope in the government’s decision on levying toll tax. If the chief minister allows us to raise power tariff, our losses will come down. The question is whether she will accept the economic logic of raising power tariff,” said a senior power department official.

According to the PWD proposal, the West Bengal State Construction Corporation Ltd — with the chief minister as the chairperson and the PWD secretary as the managing director — will be set up to look after the maintenance of all the state highways.

“The company will be allowed to take independent decisions. If its board of directors approves a decision, it will not require approval from the finance department. It will expedite the projects,” Bardhan said.

PWD officials said it had been decided that a formula would be drawn up along the lines of that of NHAI to determine toll tax rates.

“We are expecting the chief minister to clear the file as soon as possible as it has been drawn up after consulting her. We will start the process of setting up the company and inviting private players very soon,” said a PWD official.

The proposal may look fetching on paper, but implementing it will mean persuading Bengal to kick some of its habits.

“The state has to ensure proper security for the agencies that will collect toll tax. The NHAI had engaged a couple of agencies for maintenance of NH31 but when the agencies tried to collect the tax in North Dinajpur, local people chased them away and dismantled the toll tax plaza,” said a PWD official.

Infrastructure analysts pointed out that drawing private players might not be easy as the companies conduct viability studies before committing investment. “It has been observed that private companies lap up high-demand roads. Unless industrial activities go up in Bengal, getting private players will be difficult,” said an infrastructure finance analyst.

PWD officials said that of the 14 state highways, only five to six have significant industrial traffic, largely driven by natural factors such as coal, stone quarries and clay.

Source: telegraphindia.com