If you have traveled on NH-1 between Delhi and Amritsar, you have noticed a number of toll plazas. Toll plaza is a barrier point where you will stop your vehicle, pay for using the stretch of the road that a private builder has constructed and zooms ahead to stop by at the next plaza. In a stretch of 275 km from Delhi to Khanna, where I commute often, there are 2 toll plazas charging Rs. 110/- a side, when I travel by car.
All these toll collection centers are the revenue collection points of PPP projects, better known as Public-Private Partnership projects. In year 2007, Ministry of Finance has approved 37 projects under PPPAC category. In 2008, so far 8 projects are under the consideration. The project can be a highway project, flyover, bridge etc. However, mostly are highway projects trying to widen the roads, making them 4-lane, 6-lane, 8-lane etc. These projects exist because the state failed to keep pace with the infrastructure needs and humbly agreed that they can't do it themselves so they need more efficient people to work on their behalf. Let's understand this entire concept in one line. The taxpayer's money, which the government was supposed to utilize for building the infrastructure, is being given to some company to execute the project. So far, so good.
Just take any highway project. A car owner, who is a tax-paying citizen of this country, will first buy a car, pay the one time road tax and pay again to commute on the road. Now, in the name of the maintenance of the same highway project, private company is given the right to collect money from the public. Didn't that private company make margins on the project? Maybe. Maybe not. The company might have agreed to go into the long term contract of revenue sharing, rights of project-adjacent land development etc.
Whatever the agreement is that, I failed to understand WHY should the people give the extra money when they are already paying the taxes? What is the government using the taxes for? The government should pay the private company the money for executing, maintaining and whatever of the project. Finance Minister makes sure in every budget that the public is paying enough taxes. The government just can't say "Okay..Govt couldn't provide you better services myself. Govt is arranging for a private company which will provide you better services but public will have to pay more." I don't wish to pay more because this is the basic need that government is obliged to provide.
I really accept that some companies can provide better services and some people do want better services. Some people just can't afford to pay extra. Recently, the NH-8 highway stretch between Gurgaon and Delhi was put under PPP to decrease the commute time. Govt should have done that in first place. They couldn't and they let the private builder built that stretch and now the commuters have no option but to continue paying that extra toll for rest of their lives. The irony is that the traffic problem is still not solved.
Such companies, or rather Government and Private Company, should build a parallel project. NH-1 can be running in parallel just like in US where you have toll road and non-toll road. The right of choice should be reserved with the citizen.
Think, who is bigger beneficiary - Public or Private Company?
~ Navjot Singh Sohanpal
All these toll collection centers are the revenue collection points of PPP projects, better known as Public-Private Partnership projects. In year 2007, Ministry of Finance has approved 37 projects under PPPAC category. In 2008, so far 8 projects are under the consideration. The project can be a highway project, flyover, bridge etc. However, mostly are highway projects trying to widen the roads, making them 4-lane, 6-lane, 8-lane etc. These projects exist because the state failed to keep pace with the infrastructure needs and humbly agreed that they can't do it themselves so they need more efficient people to work on their behalf. Let's understand this entire concept in one line. The taxpayer's money, which the government was supposed to utilize for building the infrastructure, is being given to some company to execute the project. So far, so good.
Just take any highway project. A car owner, who is a tax-paying citizen of this country, will first buy a car, pay the one time road tax and pay again to commute on the road. Now, in the name of the maintenance of the same highway project, private company is given the right to collect money from the public. Didn't that private company make margins on the project? Maybe. Maybe not. The company might have agreed to go into the long term contract of revenue sharing, rights of project-adjacent land development etc.
Whatever the agreement is that, I failed to understand WHY should the people give the extra money when they are already paying the taxes? What is the government using the taxes for? The government should pay the private company the money for executing, maintaining and whatever of the project. Finance Minister makes sure in every budget that the public is paying enough taxes. The government just can't say "Okay..Govt couldn't provide you better services myself. Govt is arranging for a private company which will provide you better services but public will have to pay more." I don't wish to pay more because this is the basic need that government is obliged to provide.
I really accept that some companies can provide better services and some people do want better services. Some people just can't afford to pay extra. Recently, the NH-8 highway stretch between Gurgaon and Delhi was put under PPP to decrease the commute time. Govt should have done that in first place. They couldn't and they let the private builder built that stretch and now the commuters have no option but to continue paying that extra toll for rest of their lives. The irony is that the traffic problem is still not solved.
Such companies, or rather Government and Private Company, should build a parallel project. NH-1 can be running in parallel just like in US where you have toll road and non-toll road. The right of choice should be reserved with the citizen.
Think, who is bigger beneficiary - Public or Private Company?
~ Navjot Singh Sohanpal
3 comments:
Here comes the difference. In a PPP project, no money is paid to the construction company (private company) by the government.
The design is done by an agency paid by Govt, and then tenders are floated for the construction. The one who quotes the lowest construction cost bid wins. Now this private company is required to complete the construction within a stipulated time frame under the supervision of another agency.
The money spent over construction is recovered by means of toll taxes, as no money was paid. The agreement says that for say 20 years you can collect toll taxes after which you have no right over the constructed roads. After this period it becomes public property.
For eg. DK-Gurgaon expressway. As per the agreement total lease time in 20 years. In this 20 years, DSC was to construct in the first 2 years, and then collect a toll for the next 18 years. As DSC made it late by almost 1 year, they lost on 1 year of collection of toll. So they have 17 years left to earn.
The private company earns because the vehicular traffic expected which decides the toll, is much less than what actually is.
The point is here the money collected as means of taxes is not utilized at all.
Delhi-Gurgaon expressway is a pain in the a. Travel during rush hr and try to cross 40 on your speedometer and you will win a lucky prize!
Sandy, you may not have read it completely. I have already mentioned that Govt may get into long term agreement of revenue sharing/land development rights etc and thus may not pay any amount to builder for executing the project. Even in that scenario, people end up paying money for the usage of the project for many years to come e.g. in terms of toll tax. My question is very simple - Whether it is one time payment or payment over years, Shouldn't it be government who should be paying to the private builder because people are already paying taxes. Why extra toll charges? Where is my tax money being used then? Govt is boasting of huge tax collections year on year.
Where is the tax money going? - Health/Education/Social Security/Infrastructure. NO. NO. NO. It is being used for loan waiver package for farmers. Simply BRILLIANT.
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