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Tariff dodging takes its toll on India’s highway developers

November 8, 2013

BY MATTHIAS WILLIAMS

(Reuters) – Flashing lights on the roof, tailgating politicians’ motorcades, smashing up toll booths, and beating up toll collectors.

Welcome to India’s network of privately run highways, where endemic toll dodging is a drag on the finances of road operators such as GVK Power and Infrastructure and Reliance Infrastructure, and a deterrent to private investment in a country where poor infrastructure shaves an estimated 2 percentage points from economic growth each year.

Ambulances, fire trucks and the cars of senior government officials are among those exempted from paying tolls, but other drivers often claim a free ride, said Isaac George, GVK’s chief financial officer.

“If an MP (member of parliament) has to be exempted, it’s not just his car that is exempted. The entire entourage which follows or goes in front seeks an exemption,” he said. “The government has to do something because these are all revenue leakages.”

India’s cash-strapped government wants private companies to double their share of the cost of building roads and bridges by 2017 from about a fifth in the last five years.

Eight out of every 10 road projects, however, miss revenue expectations in their first year, with the shortfall as high as 45 percent, according to a 2012 study by Fitch Ratings. The slowing economy, and sometimes inflated forecasts, are partly to blame, but toll dodging is a significant factor, said Fitch India analyst S. Nandakumar.

“There is obviously resistance to tolling, particularly for brownfield or greenfield toll roads which have been tolled for the first time,” he said.

THEFT, BEATINGS

The resistance to paying tolls is part of a wider pushback against India’s attempt to charge for services such as electricity that have been heavily subsidised or free, and which are plagued by under-investment.

Drivers use threats, violence, protests and claims of powerful connections to demand toll exemptions. Road developers lose up to a tenth of their toll revenues because of dodgers, said Vishwas Udgirkar, an infrastructure specialist at consultancy Deloitte.

IRB Infrastructure Developers could not levy tolls on one road for nearly two years due to protests in the western state of Maharashtra, where Mumbai is located. Charges began on Oct. 17, after a court ordered the local government to provide police protection.

Last month, security camera footage showed 6 men, armed with rods, assaulting staff and stealing money from a toll booth outside New Delhi. Two years ago, a toll collector was shot dead during a payment dispute at a booth near Gurgaon, where cars are charged 27 rupees (44 cents).

This lawlessness comes at an economic cost.

The government awarded less than a fifth of its target for new road construction contracts to private companies in the last fiscal year, official data shows. GVK and GMR Infrastructure both pulled out of road projects stalled by bureaucracy. In July, local media reported that IRB pulled out of bidding for a harbour crossing in Mumbai because of its toll collection woes in Maharashtra.

In a bid to tackle toll dodging and ease congestion at toll gates, Road Transport Minister C.P. Joshi said he wants all national highways to use electronic tolls by 2014.

A senior government official, however, was less concerned.

“I won’t deny this is an issue,” he said, declining to be named as he did not want to publicly speak about the issue. “We are not concerned about his (a company’s) loss of revenue. He should be concerned about it.”

MAFIAS AND MINIONS

India’s toll roads tend to be better maintained and less congested than public routes. But unlike in Europe, for example, private roads, and not state roads, tend to become the main route between cities, leaving drivers with little choice.

This breeds resentment, especially if the road is pot-holed, unsafe or snarled by mind-numbing traffic.

Raju, who lives in Delhi, used to put a red flashing light on his car to pass himself off as a lawmaker to avoid tolls. He’s now befriended the driver of a genuine politician and often joins his entourage when travelling in northern India.

“They don’t provide facilities, so why should I pay a toll?” said Raju, who declined to give his full name. Highways are often congested, he said, and once, when he had a flat tyre on his way to a funeral, he waited two hours before help arrived.

Waiting for government help, and attitudes to shift, could take years.

K. Ramchand, managing director at road builder IL&FS Transportation Networks Ltd, said one way to manage toll dodgers was to let them have their way in the early days of the project.

“Most of the toll deviants are … cars normally owned by either the local mafia, the minister or his cronies,” he said. “It’s safer to keep them on your side and give them a free pass.”

“Otherwise what happens is, these 30-40 followers come on the toll plaza, make a noise and then everybody falls into that mob mentality and then it becomes a big issue,” he added. (Additional reporting by Anindito Mukherjee; Editing by Tony Munroe and Miral Fahmy)

Source-http://www.reuters.com

 

Written by ITW Editor · Filed Under developement 

IL&FS Transportation ties-up Rs. 3000 crore loans for road projects

November 8, 2013

Press Trust of India |

New Delhi: IL&FS Transportation Networks Ltd today said it has tied up loans worth over Rs. 3,029 crore for financing road projects in Jharkhand, West Bengal and Maharashtra.The loan agreements have been signed with IndusInd Bank, IL&FS Financial Services and Yes Bank, it said.

“The company was issued a Letter of Award by the National Highways Authority of India (NHAI) for development and operation of six laning of Barwa Adda Panagarh Section of NH-2…in the states of Jharkhand and West Bengal,” the company said in a filing to BSE.

“The financial tie-up of loans aggregating to Rs. 1,704.40 crore has been achieved and the loan agreements have been executed with IndusInd Bank and IL&FS Financial Services Ltd,” the company said.

The project, estimated at Rs. 2,434.86 crore, is on toll basis with a concession period of 20 years, including construction period of 910 days, the company added.

In another filing, the company said it has been awarded project by NHAI “for four laning of Khed-Sinnar Section on NH-50…in the state of Maharashtra under NHDP Phase IV on design, build, finance and operate and transfer basis.”

“The financial tie-up of loans aggregating to Rs. 1,325 crore has been achieved and loan agreements have been executed with Yes Bank Ltd,” it said.

This project, with an estimated cost of Rs. 2015.29 crore, is also on toll basis with a concession period of 20 years, it added.

Source-http://profit.ndtv.com

Written by ITW Editor · Filed Under Uncategorized 

IL&FS secures major highway widening contract in India

June 20, 2013

 

India-based transportation infrastructure company IL&FS Transportation Networks (ITNL) has signed a new concession agreement with the National Highways Authority of India (NHAI) for a Rs16.65bn ($304.3m) road widening project in the states of Jharkhand and West Bengal.

To be executed under the National Highways Development Project (NHDP) Phase V on design, build, finance, operate and transfer (DBOFT) basis, the latest project includes six-laning the Barwa-Adda-Panagarh stretch of National Highway 2 (NH-2) from km 398.240 to km 521.120, including the Panagarh Bypass.

The project is set to be implemented on a toll basis, and has a concession period of 20 years, including a 910-day period for construction. ITNL had quoted a premium of Rs420m ($7.68m) for the project.

 {“The project is set to be implemented on a toll basis, and has a

concession period of 20 years,

including a 910-day period for construction.”}

Established in 2000, IL&FS Transportation Networks is a surface transportation infrastructure company and a private sector BOT road operator in India.

The company is involved in the development, operation and maintenance of national and state highways, roads, flyovers and bridges in various states across the country.

IL&FS has also signed a concession agreement with NHAI for Rs13.48bn ($246.48m) four-laning of the Khed-Sinnar section of National Highway 50 (NH-50) in the state of Maharashtra.

The programme will carried out under Phase IV B on DBFOT basis and has a concession period of 20 years, including construction period of 910 days.

Written by ITW Editor · Filed Under Uncategorized 

Gayatri Projects SPVs achieve financial closure

December 4, 2007

Gayatri Projects Ltd has announced that the Company has achieved the financial closure for the Company’s following Hyderabad Outer Ring Road Projects (SPV’s) at an interest rate of 11% p.a., ahead of the stipulated time given by the Employer namely Hyderabad Urban Development Authority (HUDA).

Financial Closure of Hyderabad Expressways Pvt Ltd (HEPL) – Total cost of the Project Rs 430.96 crores: M/s. Hyderabad Expressways Pvt Ltd promoted in Consortium, by the Company as lead technical member, with 50% share holding, bid and won road project (AP-IV) for design, construction, development, finance, operate and maintain eight lane access controlled expressway under Phase II programme of outer ring road (ORR) of Hyderabad Urban Development Authority. The concession Agreement was signed on August 17, 2007. The total debt syndicated for this Project is Rs 290.90 crores.

IL&FS (IL&FS Financial Services Ltd) has syndicated entire debt and United Bank of India is the Leader of the Consortium of Lenders for the SPV.

Details of the package awarded are as follows: AP IV – from Bongulur to Tukkuguda from km. 108 to km. 121 on BOT – Annuity basis. Estimated Project Cost incl. IDC is around Rs 430.96 cr. and the project has a positive Grant of Rs 71.86 crores. HUDA will pay a semi-annual annuity of Rs 30.49 crore to HEPL during the Annuity period. The concession period door-to-door is 15 years, with. a construction period of 2 years 6 months and Annuity period of 12 years 6 Months.

Financial Closure of Cyberabad Expressways Pvt Ltd (CEPL) – Total cost of the Project Rs 501.75 crores: M/s. Cyberabad Expressways Pvt Ltd promoted in Consortium by the Company as lead technical member with 50% share holding, bid and won road project (APII) for design, construction, development, finance, operate and maintain eight lane access controlled expressway under Phase II programme of outer ring road (ORR) of Hyderabad Urban Development Authority.

IL&FS (IL&FS Financial Services Ltd) has syndicated entire debt and United Bank of India is the Leader of the Consortium of Lenders for the SPV.

Details of the package awarded are as follows: AP II – from Kollur to Patancheru from km. 12 to km. 23.70 on BOT – Annuity basis. Estimated Project Cost incl. IDC is Rs 501.75 crores and the project has a positive Grant of Rs 81 crores. Annuity – Rs 79 cr. p.a. HUDA will pay a semi-annual annuity of Rs 39.50 crore to CEPL during the Annuity period. The concession period door-to-door is 15 years, with a construction period of 2 years 6 months and Annuity period of 12 years 6 Months. The concession Agreement was signed on August 17, 2007. The total debt syndicated for this Project is Rs 376.31 crores

The Company is a pioneer in construction of National Highways, Dams, Canals, Aquaducts, Flyovers, Coal handling plants, Bridges, Railway Projects, Airport Runways, BOT Toll and Annuity Road Projects as develop and Industrial Constructions.

Source:  equitybulls.com

Written by ITW Editor · Filed Under Investment and Finance, Larsen & Toubro Ltd. (L&T)