Toll rates to go up :
Highway Driving To Get Costly
New Delhi: The National Highways Authority of India (NHAI) on Sunday revised the toll plaza rates across several states. The new rates will come into effect from Monday. The revision in the toll plaza rates comes a day after polls are concluded for elections to the 18th Lok Sabha. The notification from India’s highway infrastructure creator was published in various newspapers on Sunday.
Talking to news agency Reuters, an official from the National Highways Authority of India (NHAI) informed that the toll plaza rates will be increased by 3 percent to 5 percent at nearly 1,100 toll plazas starting Monday.
“As the election process is over, the revision of user fee (toll) rates, which was put on hold during the elections, would become effective from June 3,” the official said.
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Key Details:
- NHAI officials said that the revision in toll plaza rates is an annual exercise, and the increase or decrease in the prices is based on the changes in the wholesale price index-based inflation.
- The decision to increase toll plaza rates was made two months after the Election Commission of India asked NHAI to collect the increased toll plaza rates after Lok Sabha elections 2024.
- This timing is significant as it aligns with the completion of the election process.
“The process required for the decision on the power tariff may be continued by the State Regulatory Commission. However, tariff award shall be made only on the completion of poll in the relevant state, i.e. after the poll date/dates in the state. In respect of the clarification sought, it is stated that user fee may be seen in the context of the power tariff as mentioned in the Commission’s instruction cited above,” the ECI said in a communication to the Ministry of Road and Transport in April.
A senior NHAI official announced on Sunday, “The new user fee will come into effect from 3.6.2024.”
The adjustment in toll fees is part of an annual process that links the rates to changes in the wholesale price index (WPI)-based inflation.
Across the national highway network, there are approximately 855 user fee plazas where charges are levied according to the National Highways Fee (Determination of Rates and Collection) Rules, 2008.
Among these, around 675 are public-funded fee plazas, while 180 are managed by concessionaires.
High operators like IRB Infrastructure Developers and Ashok Buildcon Ltd will benefit from the toll increases.
India has invested billions of dollars over the last decade to expand the national highways, with a total length of about 146,000 kilometres, the second-largest global road network.
Toll collections jumped to more than 540 billion rupees ($6.5 billion) in the 2022/23 fiscal year from 252 billion in 2018/19, helped by a rise in road traffic as well as by increases in the number of toll plazas and charges.
Aggressive new entrants for highway projects have built up stress-like conditions in the sector, driving down bids with the result that several projects have failed to get financial closure, an analysis by India Ratings and Research has found.
The development comes just ahead of the government’s plan to revive private sector interest in the sector through awards of BoT (build operate transfer) projects where investment risks are entirely borne by the developer. The plan could require further calibration to salvage new projects, says the report
According to infrastructure outlook 2025 provided by India Ratings and Research, the new developers, many of which had transitioned from EPC (engineering, procurement and construction) to HAM (hybrid annuity model) for the first time post the relaxation in the technical and financial norms, have subsequently struggled to secure funding, as banks have tightened capital requirements.
At the same time, new entrants and relaxed bidding norms have resulted in aggressive bidding for road projects with even financially weaker players getting projects on lower bid premiums.
Aggressive bids have also come on account of fewer projects getting awarded over the last couple of years. The sponsors of some of these entries face pressure to financially close projects resulting in the National Highway Authority of India triggering project substitution to bring in new investors to salvage projects.
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