The Highways Minister C.P. Joshi recently indicated in Parliament that only about 451 complaints were received from users against toll collection agencies. But it is common knowledge that the actual magnitude of the problem is much larger.

After all, hundreds of complaints could simply have been captured in few minutes at the Delhi-Gurgaon toll plaza, one of the hundreds of toll booths spread across national highways in country. But, the small number of complaints also indicates the lack of a common institutionalised mechanism to capture user feedback.

And hopefully, the highway regulator proposed by Finance Minister P. Chidambaram will have a mechanism to capture highway users’ complaints, more so as the length of highways seeking tolls from users will go up in future.

At present, tolls are collected from 11,000-12,000 km of national highways, which is less than 15 per cent of the total network.

Ensuring user interest will be a key mandate of the highways regulator even though the proposal to set up a regulator has come primarily in the backdrop of spiralling disputes between NHAI, developers and financers.

“The regulator has to ensure users don’t get left out in this public service provision by private players. He can provide a neutral and informed view on the level of tolls that should be charged on highways,” said a Highway Ministry official involved in the process, who was unwilling to be quoted.

Toll formulae

At present, formulae to charge tolls for highways are fixed upfront through an inter-ministerial discussion and allow for certain escalation every year in line with inflation. The toll policy is part of contract between the National Highways Authority of India and developers.

One issue that needs a relook is the level of tolls that road developers are allowed to charge for roads under construction in four-to-six lane projects. In such projects, developers can charge tolls for six-lane highways, even as highway widening is ongoing.

This has attracted criticism from users, including transport union, such as All India Motor Transport Congress (AIMTC) and research body Indian Foundation of Transport Research and Training (IFTRT).

“This is clearly an area where users pay higher toll for relatively bad service. Moreover, there is no incentive for the developer to complete six-laning works fast,” the Ministry official said.

This anomaly does not exist in the norm followed for highway widening to four-lanes, where developers can charge tolls only after construction is completed. This pushes developers to complete works fast, so that their project can start earning revenues.

"Mandate of regulator should be wide enough to include entry conditions of players in the sector, toll structure, toll indexation,” said Athar Shahab, Chief Executive Officers (CEO), Uniquest Infra Ventures, a joint venture of IDFC Ltd and Malaysian Government’s investment arm Khazanah. However, Shahab did not favour intervention by regulator in existing contracts, where toll rates and their escalation methods are already determined by contract.

All stakeholders

Ensuring that parties involved in highway development fulfil their rights and responsibilities will be another key job for the regulator.

“There are four stakeholders in highway development — the project sponsor (NHAI, or the Highway Ministry), the developer or contractor who has to develop and operate the highways, the banker or financer, and the user. The regulator has to ensure a fine balance towards meeting the needs of all these stakeholders, while being skewed towards the needs of users,” said Parvesh Minocha, Managing Director-Transportation, Feedback Ventures.

“The regulator should step in and take care of disagreements between Highways Ministry/NHAI and developers. Its recommendations should help us move towards building roads instead of fighting over it. It can recommend guidelines at time when the market conditions change requiring renegotiation of contracts in the sector,” said the Ministry source.

For instance, what should be the respite for developer when the Government delays its share of deliverables, such as encumbrance-free land and environment clearances on time, which lead to hikes in project cost?

Similarly, there are also cases where a local Government arm builds non-tolled roads near toll roads, even though the contracts assure developers of no competing facility for a certain number of years.

For instance, near the Delhi-Faridabad Expressway there was an unused, rickety old road, which was repaired subsequently by the local Government. This resulted in commuters using the toll road primarily in peak hours, when there was excess traffic, which is turn affected the revenues of HCC, the toll road operator.

“The regulator should ensure both NHAI and developer function based on the principles enshrined in the contract. It should be impartial to both the parties, and function in the interest of users,” said Shailesh Pathak, President, SREI Infrastructure Finance Ltd.

Technical standard

With India accounting for maximum deaths on its roads globally, Uniquest InfraVenture’s Shahab also wants the regulator to have a say on the technical operating standards and safety for future projects.

However, the Ministry official pointed out that the technical knowledge will continue to come from Indian Roads Congress, the technical standard specification arm of Highways Ministry. He also said that the Ministry may revive another proposal — of having Road Safety Board — to look at safety issues.

National Highways and State Highways constitute about six per cent of country’s total road network, but account for 60 per cent of fatalities due to road accidents.

Investors’ comfort

“A regulator will be a comfort factor for investors,” said Shahab, and admitted that the regulator’s role will be carved out of the roles currently being performed by various arms of the Government. This space is set to see some good action. However, the fear is with the General Elections setting in next year, it may be difficult to form an independent body through an Act of Parliament.

After all, the need for a regulator in the sector has been discussed for over four-five years now... Highway Ministry had discussed the issue of having a regulator, particularly in the context of taking care of users’ woes. But, the proposal went to backburner as priority became awarding more and more highway projects for implementation.

However, that was then. Now, all stakeholders including Highway Ministry and even NHAI want a regulator. In mid-January, NHAI Chairman RP Singh had said, “The day may not be far when you would need a regulator to look at implementation of PPP highway projects.”

>mamuni.das@thehindu.co.in

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