Gujarat Toll Exemption to Affect Several Road Projects, Says ICRA

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Gujarat Government exempted small cars, vans, and state transport buses from paying toll tax on state highways

Gujarat Government exempted small cars, vans, and state transport buses from paying toll taxes in the state. The new rule was announced by Gujarat Chief Minister few days back and it was implemented from 15th August. ICRA says that this decision will affect several road projects in the state, as due to toll exemption revenue earning has been declined.

ICRA states, a total of 9 road projects will be affected due to this toll tax exemption. All of these projects are running as PPP (Public Private Partnership) models. Though the Government has exempted the small cars, state transport buses from paying tolls, but the Government itself has planned to reimburse the loss on a monthly basis on 20th of every month. Experts believe, this will directly affect the state economy too.

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According to ICRA these 9 road projects are Bhuj-Nakhatrana (45 km), Kim-Mandvi road (45 km), Deesa Panthavada-Gundari road (44.12 km), Ahmedabad-Mehsana (51.60 km), Vadodara-Halol (31.70 km), Himatnagar Bypass (8.70 km), Rajkot-Vadinar section (131.65 km), Ahmedabad-Viramgam-Maliya (180.05 km), Halol-Godhara-Shamalaji (173.03 km). Therefore a total of 710.85 kilometers of road projects are likely to be affected, as per ICRA report. These roads include a total of 23 toll plazas.

Among these 9 road projects a total of 3 are promoted by L&T, 2 by IL&FS Transportation Networks Limited (ITNL), 2 by Welspun Enterprises and one each by Ranjit Buildcon Limited and M.S. Khurana Engineering Limited. On 2 of these projects promoted by ITNL, toll is also being levied on two wheelers. In remaining 7 projects, it is being levied on cars along with other commercial vehicles.

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Speaking on the issue, Mr. Shubham Jain, Vice President of ICRA, has said, the actual traffic on a majority of these stretches is at around 60% – 65% of that of initial estimates. He also stated 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.