CAG questions success of public-private partnerships in road projects.

The Government auditor, Comptroller and Auditor General of India (CAG), has questioned the effectiveness of public-private partnership (PPP) projects in the road sector.

In its report on implementation of PPP projects of the National Highways Authority of India (NHAI), the auditor has said road users will have to pay Rs. 28,096 crore more as toll charges to developers of seven projects, due to extension of the concession period.

The seven projects span across different States, including Rajasthan, Himachal Pradesh, Uttar Pradesh and Orissa.

This increased payout for road users will be spread over two-to-seven years without the users getting any additional benefits such as wider roads. As these toll revenues (Rs. 28,096 crore) would be collected over 15-20 years, the net present value of the revenue is Rs. 3,233 crore, as estimated by the CAG.

The additional burden on users arises because the NHAI extended the concession period – the period for which a developer can collect toll from road users – for the projects by considering the traffic that can be tolled. This method of arriving at toll revenue for structuring projects is not prescribed by the standard contract agreement.

HBL