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IRF moots creation of dedicated road fund

Our Bureau

NEW DELHI, March 7

THE Geneva-based International Road Federation (IRF) has suggested the creation of a road maintenance fund for public roads based on vehicle-related taxes levied on fuel and ownership.

The IRF Director General, Mr. Wim Westerhuis, said here on Tuesday that the maintenance and rehabilitation of the existing road network required immediate priority.

Speaking at the national conference organised by the Confederation of Indian Industry, on making bankable infrastructure projects happen, he said the private sector should finance and develop highways based on the `build, operate and transfer' (BOT)/ tol l formula and profitability.

``We feel this is a policy based on common sense, which would ensure that the country develops a road system built to the highest standards at the lowest possible cost to taxpayers and road users, in the briefest possible time between 10 to 20 years '', he said.

Calling for the creation of a dedicated road fund at the earliest, he said that income from road taxes can be used for any purpose the Government decides. For example, over two-thirds of road taxes raised in Europe, are siphoned off to general budget and not spent on roads. No Government, in an industrialised or in a developing country, faced with a tight budget and public debt can resist the temptation to dip into road funds, he added.

International experience showed that privatised toll concessions are a very promising source of alternative funding for roads. In India there are clear signs of the potential for profitability of roads.

The IRF has suggested the re-evaluation of the country's current road development programme by combining public and private sector funds.

He said tolls should be levied where it is economically feasible, particularly on highway stretches with high traffic volumes, prepare the ground work for user-payer education, allow states or municipalities to share in the equity/debt financing of priva tised road facilities, create long term risk capital through pension funds and reduce the cost of capital by lowering interest rates.

The Government should also create provisions for takeover of assets and termination of license, reduce foreign exchange risk, concentrate scarce public funds on low traffic,local or rural networks and consider market mechanisms for setting the toll rate, he said.

Besides, the private and mixed capital trunk roads should follow a consistent national masterplan, focus the national masterplan on economically justified stretches and ensure that franchisees, builders and suppliers of the projects are selected on objec tive technical and financial grounds.

He also called for inviting foreign bidders for concessions and contracts on par with Indian franchisees and contractors, ensuring a rational and stable legal and fiscal framework for all stakeholders besides settling litigation through internationally a ccepted procedures.