The National Highways Authority of India (NHAI) has sought separate tripartite agreements with state governments to strengthen the state support agreements for road projects.
Official sources said, the state support agreements were essentially for the states through which the highways passed. The agreement would envisage support from the states for enforcement of the Motor Vehicles Act, for certain provisions of the Land Acquisition Act and also making available facilities for free traffic movement along the highways.
These agreements would be signed between the concessionaire, the NHAI or the surface transport ministry and the states.
This agreement would be worked out for all the projects, and negotiations are already underway with two states. These states include Rajasthan, for the Jaipur Kishangarh project for which bids have been invited and Tamilnadu, for the Tindivanam-Chingelput corridor and the Hosur Krishnagiri project. Sources said, that in projects involving more than one state, all the states would become part of the agreement.
They said in the event of a default on the agreement, the states would have to compensate the project operators during the concession period. However, where the states are not in a position to compensate, NHAI has undertaken to meet the payments.
NHAI can also recover compensation from the states. The sources said that this would involve preemption of part of the central transfers to the states. This would be similar to what is being done by some of the central sector undertakings, like the National Thermal Power Corporation, Coal India Limited and the Power finance Corporation. Recovery of dues from the states would be part of the state support agreement, they said.
Currently, the existing concession agreements signed for the bypasses and the bridges do not include such provisions.
The only existing state support agreement is for providing the operators with traffic flows, through imposition of restriction on alternative non-toll roads. For instance, in the Durg bypass project, heavy commercial vehicles have been barred from using the roads falling within the urban limits of the town.
Some of the bidders for the Jaipur-Kishangarh and the Chingelput Tindivanam project have pointed out to the NHAI that the Motor Vehicles Act was an area where they needed support from it for recovery of operation and maintenance costs incurred due to damages from overloading of trucks. Since the Motor Vehicles Act enforcement is in the state's power, off loading of overloaded trucks or penal levies are currently vested with the them. In the event of such violations, under the tripartite agreement, the state's are expected to become liable for compensating the BoT operators.