Will centre resolve toll plaza issues to end the bumpy ride?

After staying strong for more than a week, the truckers finally agreed to withdraw their nationwide protest after the Union government agreed to consider their demands late on Friday. However, even as the hectic activities resumed within hours, the protest brought the as-yet unresolved debate on toll collection and toll plazas functions back to the forefront. 

It was in 1997 that the Centre decided to set up toll plazas at all highways and expressways that have four or more lanes. Since then, the idea has grown to generate revenue from greenfield projects, and has expanded to encompass the existing highways that were tapped for monetisation. Twenty-one years and 462 toll plazas later, now the road transport sector is demanding the government to scrap all the existing toll plazas. 

But, unlike the virulent anti-toll activists across the country who are opposed to even the idea of toll, what the truckers are demanding is an introduction of a one-time annual payment. 

What has remained a major concern for the transporters is the long hours that the vehicles have to spend to cross these toll plazas. A 2016 study by the Indian Institute of Management-Calcutta, which was commissioned by the Transport Corporation of India (TCI), ‘Operational efficiency of freight transportation by road in India’, revealed that truck drivers had to spend as much as 2.5 hours at toll plazas that dot along an average distance of 1,400 km. 

This report by IIM-C faculty Subrata Mitra, who studied 28 routes across the country in 2014-15, noted that the fuel loss incurred due to the long wait at toll plazas was a whopping Rs 1 lakh crore. The drivers from Tamil Nadu who spoke to DT Next concurred, explaining how they have to spend about five times the amount on fuel when compared with the money spent as toll. Little surprise, then, that they are willing to make a one-time annual payment instead of the present arrangement. 

Take for instance the account by Panneerselvam, a truck driver from Vellore, who frequently drives between Chennai and Mumbai. There are 24 toll plazas between the two cities, and costs him approximately Rs 4,700 merely as toll. That, however, is only one side of the issue. During normal days, Panneerselvam says he spends around two hours at toll plazas. But this would worsen during weekends and holidays when the time required to cross these facilities would run to more than 3.5 hours.

This aside, they also have to deal with police and road transport officials, who allegedly stops and fleeces them. After taking all these factors into account, truckers have to factor in nearly half a day for stoppages along, said Panneerselvam. This delay is highlighted by the IIM-C study, that shows how travel time has reduced considerably but more efforts are required to reduce the stoppage delays and thus bring down fuel cost. 

The rules surrounding concessionaires are explained in the notification issued by the Union Ministry of Shipping, Road Transport and Highways in 2008 about toll collection and location of the toll plazas. But there are exemptions listed under the rules, which, according to opponents, clearly favour the private partner. 

For instance, the base rate is fixed for different categories of vehicles such as cars, light commercial vehicles, buses, trucks, multi-axle vehicles and even for oversized vehicles. The concessionaires are directed to adhere to the base rate. However, the toll operators are allowed to collect extra if there are any permanent bridges, bypass or tunnels, depending on their constructional cost. Also, the reason for hiking toll fee are seldom displayed publically, which further allegedly helps the operators in fixing a favourable rate. 

The location of the toll plaza is another rule that is allegedly favouring the operators. The rule mandates that it should not be setup within 10 kilometres of a municipal or local town area limit. But if the executing authority appointed by the Centre wishes, toll plaza can be setup within 5 km of town limit. Even this 5 km distance can be tinkered if a section of National Highways, permanent bridges or tunnels are constructed within the town area. 

There are similar exceptions provided for reducing the distance between two toll plazas – originally fixed at 60 km. If the executing authority decides to setup another toll plaza within this distance, the rule permits the authority to go ahead after obtaining just a written note from the concessionaires. Again, if there are any permanent bridges, bypasses or tunnels, the toll plazas can be setup within 60 km. Providing a loophole, the exact distance had not been mentioned, which allegedly allows the concessionaires to setup toll plazas.

The system of toll plazas in India is called ‘open toll plazas’ where the road users have to pay the fee for the whole section of the road even if they do not use the entire stretch. However, most countries follow ‘closed system’ of toll plazas where the users pay only for the distance travelled on these roads. 

In Germany, the vehicle movement along toll roads is monitored using satellites and the amount is calculated based on the total distance that the users travel on the toll roads. A vehicle owner can this amount either manually or online. Similarly, toll roads are barrier-free in Canada, and the amount is calculated monthly on the basis of total distance travelled. 

Another key difference between the toll plazas in India and foreign countries is the option of toll-free roads, which are absent in India. In countries like France, the public has the choice to travel on roads without toll. But in India, road users forced to use the road after paying the fee in the absence of a choice. Even the committee of secretaries, which was set up under the committee on infrastructure, had highlighted this key difference, but this did not bring about any change in the toll policy.

In this, the private party builds a certain section of the highway and maintains it for the tenure of the concession period – usually 25 to 30 years. The company will recoup its investment by collecting toll, which is revised periodically. After the end of this period, the asset goes to the authority that commissioned the work. – NHAI in this case.

Here, the government agency owns the asset and finances the project, while the private firm is only involved in the design, builds and operate the stretch. The company will be paid in periodical instalments, and also paid a fee to operate the section of the highway for a predetermined period. Under this model, the private party has little or no financial implication.

A combination of the BOT and engineering, procurement and construction (EPC) models, this is an arrangement where the NHAI pays 40 per cent of the project cost in five equal instalments (depending on the actual progress of work). The rest 60 per cent will have to be borne by the private firm initially, which would be paid as semi-annuity payments. With the NHAI itself collecting toll, the private partner has little risk to bear. 

This is a new idea, one that does not involve creation of new assets unlike the other three. Instead, it is monetisation of existing assets so as to generate funds for greenfield projects – like collecting rent from a building to construct a new one. In this, highway stretches are identified on the basis of potential revenue and transferred to private firms for operation including maintenance. In return, the private partner transfers a lump sum amount upfront, and will recoup the investment through toll during the concession period (25-30 years).

Rs 9,681.5 crore - The amount for which the first set of nine projects (stretching to nearly 650 km) was taken on auction by Singapore-based Macquarie Asia Investment Fund under the Toll-Operate-Transfer scheme. Such was the interest it generated that the whopping winning bid was substantially higher than the Rs 6,258 crore that the NHAI had hoped to generate. This bundle includes nine stretches in all, five highways in Andhra Pradesh and remaining four in Gujarat. 

14% - 16 % - Estimated return for the TOT concessionaire as per the report by CRISIL Research. That is, at the end of the 10th year, the company would have recouped 140-160 per cent of its investment. The collection in the next 20 years would help fund the maintenance of the highway stretch and bring in the profits.

Rs 40,000 crore - The money expected to be brought in by the first batch of 75 projects that have been identified to be auctioned under TOT scheme