Gujarat's toll exemption for vehicles to cost over Rs 3000 cr: Report

Decision to exempt these vehicles was taken by the Gujarat's new chief minister Vijay Rupani

Nine toll road projects, awarded through public private partnership (PPP) route in Gujarat, might be affected if small vehicles — like car, jeep and three-wheelers — and Gujarat State Road Transport Corporation buses are exempted from paying toll on 27 toll plazas on the 12 state highways from August 15, says rating agency ICRA report. 

The decision to exempt these vehicles was taken by the Gujarat's new chief minister (CM) Vijay Rupani. 

For eight of the nine projects, the total revenue for the financial year 2015-16 is estimated to be Rs 501 crore. Assuming a growth of 6 per cent in toll collections every year, the total revenues during the concession period for these projects is estimated to be Rs 13,747 crore, said ICRA. Therefore, the total burden on the government of Gujarat is estimated to be in the range of Rs 3,024 crore to Rs 3,436 crore.

Gujarat's deputy CM Nitin Patel had made an announcement in this regard on August 11. The decision which was taken in-principle by the Anandiben government.

This comes as a relief to around 86,000 vehicles passing through 12 state highways daily. The government plans to compensate the revenue loss incurred by monthly reimbursements for exempted vehicles.

Of the nine projects, three are promoted by Laursen & Toubro, two by IL&FS Transportation Networks Limited (ITNL), two by Welspun Enterprises and one each by Ranjit Buildcon Limited and M S Khurana Engineering Limited. On two of the projects promoted by ITNL, toll is also being levied on two-wheelers, whereas for the remaining seven projects, it is being levied on cars along with other commercial vehicles.

The Government has directed the concessionaires to set up exclusive lanes for cars, jeeps and vans and count the vehicles using automatic vehicle counters. Based on historical data, a formula would be derived to make necessary adjustments for exempted traffic, local users, traffic availing return journey and monthly passes.

Shubham Jain, vice president, ICRA, said, "The actual traffic on a majority of these stretches is at around 60-65 per cent of that of initial estimates. Projects for which there is a revenue share payable to the Gujarat State Road Development Corporation Limited, have already sought deferment due to weak toll collections."

"Toll exemption for private vehicles and state transport buses will be an additional burden on the cash flow and would affect the debt-servicing capability further. Therefore, timely and adequate reimbursements from the State Government body remain critical from the debt-servicing point of view," he further added.

ICRA feels that making these state roads toll free for passenger vehicles could result in increased usage of these stretches by these vehicles, either due to increased frequency of use or shift of traffic which was earlier re-routing through alternate routes to these stretches.

The state government has clearly specified that in case of an unreasonable rise in exempted traffic, it will restrict itself to the compensation considering reasonable growth rate of traffic.