Perpetual User Levy Nixes Shadow Tolling Concept

The government's decision to levy user charges on all major sections of the upgraded National Highways for perpetuity means that the concept of shadow tolling, which experts say is a more equitable model with adequate comfort for both the operator and the government, has been junked for good.

Under shadow tolling, a variant of the BOT (build-operate-transfer) model mooted for implementing road upgradations under the Rs 58,000 crore National Highways Development project (NHDP), the commuter is not directly charged for using the facility. Instead, the government pays the private developer a fee depending on the number of vehicles using the road.

"Once you toll a road, the traffic automatically reduces resulting in lower payouts to the operator than when the road is free. Consequently no operator would want to take up a stretch on shadow tolling when the government is collecting user charges on it," a senior government official said.

The concept of shadow tolling is widely used in several European countries including United Kingdom, Portugal, Finland, Ireland and Spain, where roads built using the model are not subject to any tolls.

Operators would obviously favour concepts such as the annuity, where payouts are independent of the traffic flowing through the stretch and the government pays a fixed amount on a semi-annual basis out of the cess on petrol and diesel, the official said. Tolling on annuity stretches will have no effect on the payouts.

At the onset of the NHDP, the government had planned a mix of different models along with the BOT. As the expensive annuity model was considered too much in favour of operators, shadow tolling was considered a balancing act where the operator would be susceptible to traffic risk, thereby ensuring more degree of accountability towards maintenance of the road section in good condition throughout the concession period.

Incidentally, the government had identified the Tuni-Ankapalli stretch on national highway five for construction using the shadow tolling model, which was later converted to the annuity model.