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The National Highways Authority of India (NHAI) will crack down on state governments that builds toll-free competing facilities running parallel to tolled national highways, emboldened by a recent Supreme Court judgement on a case involving Delhi metro rail.
Such a key violation of the state support agreement signed between NHAI, private road developer and respective state government while building national highways in many instances, has triggered concern among private investors as the traffic diversion to toll-free roads hurt the viability of toll roads.
“The state support agreement is very weak,” said the head of a global infrastructure firm that runs toll roads in India. “If state intervention is required to check violations such as building parallel toll-free roads causing traffic diversions and the private developer wants to raise a claim against that, the state support agreement does not get implemented. There is an urgent need to overhaul the state support agreement,” he said.
On September 06, the Supreme Court told the Delhi Government to use public money wisely and refrain from providing free metro rides to women in the national capital as that would make Delhi Metro Rail Corporation (DMRC) an unprofitable venture.
"If you will allow people to travel for free, then the Delhi metro may go into loss. If you will give freebies, we will stop you. Do not give sops, it is public money," the court said.
It also directed the Centre and the Delhi government to bear the land cost for Phase IV of the Delhi Metro project on a 50:50 basis.
The bench said that operational loss, if any, in the 103.94 km long Phase-IV of the Metro project would be borne by the Delhi government as it is a mode of conveyance in the national capital.
"The GNCTD (Government of National Capital Territory of Delhi) is bound to ensure that financial health of DMRC is maintained properly and no steps are taken so that it may run into loss," the bench said.
Terming the apex court judgment as a “very positive development” also for the national highway sector, NHAI chairman Nagendra Nath Sinha said: “The state support agreement will be strictly enforced. The Supreme Court has given a strict warning on the dispute between Delhi Metro and Delhi government. NHAI will also follow a similar model if the Minister’s warnings are not heeded by the state governments”.
“You can be rest assured that if somebody builds a competing facility without compensating the existing highway developer, then NHAI will strictly enforce the state support agreement,” Sinha told private investors and developers during a road show in Mumbai.
Road Transport and Highways Minister Nitin Gadkari said that, “we have tightened the state governments on state support agreement”.
“After I issued warnings that work on national highways in the some of the states will be stopped, states such as Assam and Kerala have fallen in line,” Gadkari said on September 09 in Mumbai.
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