Thursday, June 21, 2012
Thursday, June 14, 2012
Toll roads awarded before 2009 can yield 22% return: Crisil
S. Shanker
High inflation, revenue booster: A view of toll plaza of National Highways Authority of India.
Mumbai, May 28:
Crisil Research said toll road projects awarded before 2009 could earn an average return on equity of 22 per cent.
Traffic growth boosts revenues
The study, covering 23 operational build-operate-transfer projects,
indicates that less competition had kept bid amounts modest and higher
than expected growth traffic had boosted toll revenues.
The 23 projects form one-fourth the length of BOT toll road projects operational in the country.
Typically developers look for 16-18 per cent returns while bidding.
Scene before 2009
Crisil said on an average, only five developers bid for each project prior to 2009.
This was due to uncertainties in policies on BOT toll road projects.
Developers were unsure whether the government would transfer land in time for construction.
Further, the absence of an exit option meant that developers could not sell their entire equity stake in the projects.
On an average, toll revenues for the 23 projects increased 10-12 per cent over 2008-09 to 2010-11.
Crisil said assuming future traffic growth at a modest six per cent
through the remaining term of the projects the equity returns for these
projects were likely to exceed 20 per cent. High inflation also boosted
toll revenues.
“As changes in toll rates are linked to movements in the WPI, the
average increase in toll rates was similar to the increase in the WPI
during the period,” said Mr Ajay D'Souza, Director, Crisil Research.
AGGRESSIVE BIDDING
Increased competition led to aggressive bidding for newer BOT projects.
The attractiveness of projects increased with the government speeding
land acquisition, providing an exit option in the licensing agreement
and awarding lucrative stretches of the National Highway Development
Programme.
The average number of bidders for one project has gone up to 25-30. In
most of the newer projects, developers have been offering a premium.
A premium is a committed annual payment to the government over the term of the project.
In 2011-12, almost 65 per cent of the projects were awarded on premium basis, compared with 25 per cent in 2008-09.
According to Mr Prasad Koparkar, Senior Director, “The premium amounts
even exceeded the project cost in some NHDP Phase III and V projects,
for which bidding was particularly aggressive. Crisil expects the higher
premium to bring down the average equity returns to about 14 per cent.”
http://www.thehindubusinessline.com/industry-and-economy/logistics/article3465335.ece
Hunger Strike Against BOT (Toll) Model at Palliakkara, Kerala
When I was in India two months ago, I witnessed on the TV screen, the
Kerala Police on order from the government brutally removing the
protesters against an impending BOT toll collection at Palliakkara, a
place on the Mannuthy -Idappally national highway.
The protest in the context of India’s neo-liberal market projects, noted for non-participation and support by trade unions or major political parties including the C.P.M (Communist Party of India, Marxixst) noted for its interest in socialist causes, is dubbed as a new social phenomenon. It showcases the Kerala publics’ direct answer to toll collection on their roads. A hunger strike, started as part of the protest, since 19 February 2012 is still on, as per my knowledge.
Though protesters are of the opinion that the toll is an additional burden on the finance of the road users, that is not all for what they are protesting. They have deeper issues brewing in their mind, racial, historical, socio-cultural, economical and structural. They see it as their government’s blatant support to the finance capitalists’ enrichment at the expense of their right to use the national highways.
The protesters have formed a Committee Against Privatisation of National Highways and land Displacement (CAPNHD). Land eviction and privatisation of road go hand in hand that is the government evicts the owners of land from both sides of the road after paying nominal compensation and present it to the constructors.
Road use in Kerala is a very sensitive thing that has serious historic and racial connotations. There were, once, racist rules, which effectively chased the public- the majority- away from the use of Kerala roads or paths, tinkered and used by the upper castes. Only after independence such practices were brought to a halt through laws and not through social reforms.
Though the present situation is seemingly somewhat different, it brings back to their mind the old memories.
Structural problems are the most severe ones.
In India, roads have always been a serious problem to the extent of hampering its development, progress, communication and image, ever since it became a free nation. Nothing much has changed even now. In Kerala, during holidays, I take to cover a thirty KM the equivalent time needed to cover a hundred KM here in South Africa. On a long trip your nightmare is ‘traffic jam’ which can cause a delay from three to five hours in reaching your destination.
When compared to conditions in other parts of the world, the Kerala roads and highways are a disaster. Filled with potholes, broken edges, single lane in most parts, ugly, smelling, dirty, and no pedestrian paths, traveling on them are like taking big risks.
Traditionally Indian roads were constructed through public procurement which had two defects: 1. budgetary constrains 2. weak planning and implementation that resulted in serious time and cost overruns. So ever since the eighties that is since the 7th Five Year Plans the nation was looking for non-conventional source of resources and private sector participation.
The leap from that stage to the current BOT toll gate is rationalized in the government document……
So Pallikakkara is not an isolated case, simply a for-runner to what is going to happen on state and national highways all across India.
WHAT ARE THE PROTECTOR’S RATIONAL?
So, if the construction of roads and highways is of such a high necessity, why are they protesting at Palliakkara?
According to them, or the people of Kerala at large, Palliakkara toll gate have serious structural issues.
On April 19, 2012, dr.A .Achuthan an activist on environment suggested in a CAPNHD meeting that the public demand is not to reduce the toll rate at Palliakkara on Mannuthi -Idappally road but to completely eliminate it.
He pointed out that 1. the road construction on the BOT toll gate is simply intended to enrich the owners of the global capital. 2 The government’s argument for introducing the BOT toll as lack of money is not the truth. The government is paying millions in tax rebate and commission to the constructors which is more than the real cost. 3. The government is busy making rules to implement the land eviction 4. According to the decision of the Road Congress of India for a four lane highway only 30m width is needed, but the government is extending it to 45m. This is to promote the interest of the fast moving road users, thatcomes only 10 percent. 5 It is infringing upon the people’s democratic rights on highways and the roads and 6. The BOT constructors have not completed the road work as per promise and standard practices.
The editorial of Madhyamam, a local language news paper is more graphic on the structural issue. According to which the cost suggested by Kerala’s Public Works Department (PWD) is 6 t0 7.5 crores per KM, while it is 17 to 25 crores for the BOT toll constructors. That is for a four lane highway from Kasargode to Idappally costs only Rs. 3000 crores if done by the PWD the BOT toll cost is 8000 Crores. Also the government should pay a forty percent of this as commission to the BOT toll constructors. That is the government should pay RS. 3200 crores (40% of 8000) which is 200 crores more than the PWD charge. On top of this the government should find the land eviction cost.
Also after the construction the BOT toll company is given a 30 year right on the road during which period it can charge toll on the road users. Also no new road should be constructed closer to the BOT toll roads during this period.
It is also pointed out that there was no real road construction done on the Mannuthy- Idappally road by the BOT (Toll) constructors. Instead they had only scratched the sides of the existing 30m highway to make it 45 m wide.
The protest in the context of India’s neo-liberal market projects, noted for non-participation and support by trade unions or major political parties including the C.P.M (Communist Party of India, Marxixst) noted for its interest in socialist causes, is dubbed as a new social phenomenon. It showcases the Kerala publics’ direct answer to toll collection on their roads. A hunger strike, started as part of the protest, since 19 February 2012 is still on, as per my knowledge.
Though protesters are of the opinion that the toll is an additional burden on the finance of the road users, that is not all for what they are protesting. They have deeper issues brewing in their mind, racial, historical, socio-cultural, economical and structural. They see it as their government’s blatant support to the finance capitalists’ enrichment at the expense of their right to use the national highways.
The protesters have formed a Committee Against Privatisation of National Highways and land Displacement (CAPNHD). Land eviction and privatisation of road go hand in hand that is the government evicts the owners of land from both sides of the road after paying nominal compensation and present it to the constructors.
Road use in Kerala is a very sensitive thing that has serious historic and racial connotations. There were, once, racist rules, which effectively chased the public- the majority- away from the use of Kerala roads or paths, tinkered and used by the upper castes. Only after independence such practices were brought to a halt through laws and not through social reforms.
Though the present situation is seemingly somewhat different, it brings back to their mind the old memories.
Structural problems are the most severe ones.
In India, roads have always been a serious problem to the extent of hampering its development, progress, communication and image, ever since it became a free nation. Nothing much has changed even now. In Kerala, during holidays, I take to cover a thirty KM the equivalent time needed to cover a hundred KM here in South Africa. On a long trip your nightmare is ‘traffic jam’ which can cause a delay from three to five hours in reaching your destination.
When compared to conditions in other parts of the world, the Kerala roads and highways are a disaster. Filled with potholes, broken edges, single lane in most parts, ugly, smelling, dirty, and no pedestrian paths, traveling on them are like taking big risks.
Traditionally Indian roads were constructed through public procurement which had two defects: 1. budgetary constrains 2. weak planning and implementation that resulted in serious time and cost overruns. So ever since the eighties that is since the 7th Five Year Plans the nation was looking for non-conventional source of resources and private sector participation.
The leap from that stage to the current BOT toll gate is rationalized in the government document……
So Pallikakkara is not an isolated case, simply a for-runner to what is going to happen on state and national highways all across India.
WHAT ARE THE PROTECTOR’S RATIONAL?
So, if the construction of roads and highways is of such a high necessity, why are they protesting at Palliakkara?
According to them, or the people of Kerala at large, Palliakkara toll gate have serious structural issues.
On April 19, 2012, dr.A .Achuthan an activist on environment suggested in a CAPNHD meeting that the public demand is not to reduce the toll rate at Palliakkara on Mannuthi -Idappally road but to completely eliminate it.
He pointed out that 1. the road construction on the BOT toll gate is simply intended to enrich the owners of the global capital. 2 The government’s argument for introducing the BOT toll as lack of money is not the truth. The government is paying millions in tax rebate and commission to the constructors which is more than the real cost. 3. The government is busy making rules to implement the land eviction 4. According to the decision of the Road Congress of India for a four lane highway only 30m width is needed, but the government is extending it to 45m. This is to promote the interest of the fast moving road users, thatcomes only 10 percent. 5 It is infringing upon the people’s democratic rights on highways and the roads and 6. The BOT constructors have not completed the road work as per promise and standard practices.
The editorial of Madhyamam, a local language news paper is more graphic on the structural issue. According to which the cost suggested by Kerala’s Public Works Department (PWD) is 6 t0 7.5 crores per KM, while it is 17 to 25 crores for the BOT toll constructors. That is for a four lane highway from Kasargode to Idappally costs only Rs. 3000 crores if done by the PWD the BOT toll cost is 8000 Crores. Also the government should pay a forty percent of this as commission to the BOT toll constructors. That is the government should pay RS. 3200 crores (40% of 8000) which is 200 crores more than the PWD charge. On top of this the government should find the land eviction cost.
Also after the construction the BOT toll company is given a 30 year right on the road during which period it can charge toll on the road users. Also no new road should be constructed closer to the BOT toll roads during this period.
It is also pointed out that there was no real road construction done on the Mannuthy- Idappally road by the BOT (Toll) constructors. Instead they had only scratched the sides of the existing 30m highway to make it 45 m wide.
e-tolling on Gauteng highway (South Africa) blocked by Pretoria high court
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By Prasannakumary Raghavan | May 7![]() | ||
On April 28, two days after the South African government decided to postpone the e-toll collection on the Gauteng highway by one month, Judge Bill Prinsloo of the Pretoria High Court passed a prohibitive order to block the collection pending a final court decision on the matter. This final decision may take months or years according to the experts.
Judge Prinsloo was acting on an interdict brought over by the Opposition to Urban Tolling Alliance (Outa), South Africa.
The following statements in Judge Prinsloo’s judgment would give the readers the considerations behind his judgment.
“I am inspired by the fact that the dispute has enjoyed nationwide prominence and debate. It is important for some form of clarity to be received,” he said.
About Outa’s effort he mentioned: “After careful considerations of the arguments, the applicant has managed to cross this hurdle. I am persuaded that the applicants have managed a prima facie case to have the decisions reviewed.”
He also considered the road users suffering in making the extra payment” the decision to e-toll was unreasonable because road users would be required to pay more for the collection of tolls than they did for the actual road upgrades.
Another consideration was the lack of transparency; “Sanral has refused to disclose, despite invitation, the true costs of e-tolls or the contract with the ETC(Electronic Toll Collection) -joint venture.” (Sanral is the national road construction company that was going to collect the toll in the Gauteng highway.
Toll collections in India and South Africa have similarities and contradictions. In both countries the matter is revolving around unscrupulous privatisation of road development and its ‘unreasonable’ impacts on the road users- the public.
However, in South Africa it ‘enjoyed national wide prominence and debate’. They centered around questions on transparency in the actual spending and the fairness in contracting. All political parties including the ruling and the opposition took active participation in it. All unanimously welcomed Judge Pinsloo’s judement on toll collection.
COSATU (Congress of the South Africa, which is in partnership alliance with the ruling ANC (African National Congress) Party welcomed the judgment saying, “We hope that the e-toll system will be abandoned forever … The system has proved to be unpopular and impossible to collect,”.
In India too there are signs of similar public protest. It is in response to a PIL case that the Supreme Court of India questioned the Policy on toll collection on the under-construction Gurgaon-Delhi highway.
But it is a matter of concern in the case of Palliakkara Kerala, that the protesters – the majority among the road users- enjoy no support from the political parties both – ruling and opposition. The ruling UDF is an alliance among the cultural minorities in Kerala. The opposition L.DF is also an alliance party, the Indian Communist Party (Marxist) being the major player in it. It is rumored that individuals from both alliances enjoy high stakes in the construction companies.
In the market driven globalisation, government finds public-private-partnership an effective option for the much needed infrastructure development. BOT is such as partnership initiative. Consequently the private can be selfish, and uncaring to the public in their crave for profit. So a balancing between these two interest is a must. That can only be effectively achieved by an informed and enlightened public
http://indiablooming.com/india/e-tolling-on-gauteng-highway-south-africa-blocked-by-pretoria-high-court#more-1447
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