Bangalore: The bell will toll soon for road users

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  • Travel on State highways will come for a price, as the govt finally decides on user charge


Bangalore, 13 June 2011: As if the perennial hikes in petrol prices coupled with the collection of user fee by the National Highway authorities weren’t enough, road users in Karnataka will soon be paying toll on some important State Highways and Major District Roads -- making road travel a rather expensive proposition.


With the State government having amended the Karnataka Highways Act, 1964, any State road to be developed or upgraded with an external financial assistance or together with private investors, will require road users to pay a user fee.


For starters, toll will be levied for the very first time on 269 km of State Highways that are now being upgraded under the Karnataka State Highways Improvement Project (KSHIP) – II. The projects are said to be completed in 30 months. The project will be funded by a $350- million loan from the World Bank.


The State Cabinet had given a green signal for tolling 2,385 km of roads developed under KSHIP-I. While the PWD was all set to collect toll, the government had however stalled it as the ZP and TP elections were nearing. With the elections behind it, the government now plans to go ahead and levy the toll.


According to an estimate, the PWD requires a whopping Rs 20,000 crore for road repair, upgrade and maintenance work every year. But the fund allocated to the department in the annual budget is only between Rs 2,000 crore and  3,000 crore, despite the State Government running revenue surpluses.


In 2011-12, the State’s revenue surplus is estimated to be Rs 3,000 crore. Instead of investing on infrastructure development like road upgrade, the government usually spends the surplus money on various populist programmes targeting voters.


Moreover, the government doesn’t spend much on road development from the money set aside under the capital expenditure head. Fees collected from lorries transporting minerals for road development are usually diverted for implementation of other budgetary schemes.


As a result, the PWD is forced to borrow, specially from international funding agencies. The World Bank, which had funded KSHIP-1 project on the condition that the State government should collect toll from road users for future maintenance, has agreed to extend assistance to KSHIP-II projects with the same rider. This forced the government to amend the State Highways Act paving way for tolling, despite opposition from all quarters.


The State government requires a recommendation from the Centre while procuring international assistance. When Karnataka sought the recommendation of department of Economic Affairs under the Union Finance Ministry, the department recommended the sanction of a loan amount of $200 million. Only after the State pressured the department, did it recommend a loan of $350 million. The government is yet to avail funding or investments for the remaining 1,564 km of the proposed 3,411 km to be developed by KSHIP and Karnataka Road Development Corporation Limited (KRDCL).


Apart from World Bank, the government has been able to get a financial assistance from the Asian Development Bank, which has agreed to extend a loan of USD 315 million respectively for roads to be developed by KRDCL.


While the average estimated cost of laying one km of road is Rs 2.2 crore to Rs 2.5 crore under the “prescribed standards,” the proposed toll to be levied will be on par with the NHAI rates.


An amendment was brought to the Karnataka Highways Act, 1964 on July 27, 2010, where the “government, having regard to the expenditure involved in cost of acquisition of land and construction, development and maintenance of highways developed under PPP (annuity or by raising loan) may levy and collect fee from users of highways for services rendered.”


Loan negotiations for the World Bank project were held on February 14-15, 2011, while the loan agreement was signed on May 30, 2011. As much as 831 km (269 km plus 562 km) of State highways will be upgraded to two lane under this loan assistance.


Implementation will be taken up in two categories – Engineering Procurement Contract (EPC) covering 269 km at a cost of Rs 525 cr, and annuity contracts covering 562 km at a cost of 1,500 crore. Work orders for 269 km have been issued to five different contractors, while the project deadline has been set between 18 and 30 months.


The contracts for the five EPC projects were signed in March/April this year. The Construction Supervision Consultancy Services for EPC was signed on April 26. Request for Procurement (RFQ) for procurement of annuity contracts has been issued, and last date for submission is June 10, 2011.


KRDCL is aiming at developing 400 km of highways under either EPC or modified/hybrid annuity basis. The loan agreement for the KRDCL project will be signed in July or August. The loan will have to be repaid at four pc interest from the fifth year and sixth year onwards, in a span of 18 years for both World Bank and Asian Development Bank projects, respectively.


Other project initiatives envisaged under the World Bank and ADB projects are --identification of core road network; uniform tolling policy; road asset management system; PWD financial management system; governance and accountability plan (GAAP); road safety programme and establishment of Centre of Excellence; and operationalisation of Karnataka State Highway Traffic and Transport Authority (KSHTTA).


Experts group to help State


The department is planning to set up Planning and Road Asset Management Center (PRAM-C) where 30 to 35 experts from various fields including transport, road safety, maintenance and IT will be brought gether, who will help in planning the development and maintenance of the roads.


Project Director, KSHIP, Prakash Kumar said an expression of interest had been floated, and six firms had been short listed.


“We will take their assistance for two or three years, in which time the experts will ensure that this Center will be capable of doing things on its own. Engineering is not the problem for the department, but hand-holding is required in planning and approaching issues like road safety. The Center will work as the nerve center of the PWD,” he added.


 Families to be displaced


Under the World Bank project, about 394 acres of private land and 14 acres of government lands are in the process of being acquired, while under the ADB project, 325 acres of private land and 18 acres of government land is being acquired.


As per the survey conducted an estimated 14,964 persons (3,397 families) will be affected or displaced under the World Bank project for constructing 831 km, while 33,047 persons (8,584 families) will be affected under the ADB project for constructing 615 km.


Officials said around 44 families that will be displaced in the first phase (269 km) will be provided with developed plots with construction cost as per matrix. The State government has earmarked a budget of Rs 60 crore for compensation and rehabilitation package.



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