1. Maharashtra government’s order to stop toll collection hits road developers hard as PWD fails to pay up full amount

Maharashtra government’s order to stop toll collection hits road developers hard as PWD fails to pay up full amount

Road developers in Maharashtra have received less than the half the amount they are owed by the Public Works Department (PWD), over the last two years.

By: | Mumbai | Published: March 29, 2017 5:43 AM
What is worrying developers even more is the lack of any clear methodology in calculating the amount of compensation they are owed by the PWD. (PTI)

Road developers in Maharashtra have received less than the half the amount they are owed by the Public Works Department (PWD), over the last two years, on account of the state government’s decision to stop collection of toll from light motor vehicles (LMV) and state-owned transport buses, from June 1, 2015. What is worrying developers even more is the lack of any clear methodology in calculating the amount of compensation they are owed by the PWD. Of the 38 toll plazas managed by the PWD, 12 have been closed with over R230 crore paid to contractors as full and final settlement. However, of the remaining 26 toll plazas under the PWD, where LMVs and state-owned buses too, are exempt from paying a toll, there is some debate on how much is owed to the developers.

Ashish Singh, principal secretary, PWD, Maharashtra, told FE, “Developers are disputing what we are paying out as compensation. One dispute relates to the way we are calculating it. It will be decided in the Courts. In most of the cases, where we have Court orders, the ruling is mostly in favour of compensating developers as per the cash flows they have submitted, but here, too, developers are disputing it in higher courts.”

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“While we welcome the move to exempt passenger cars from paying toll, nonetheless, the decision has opened up a Pandora’s box as the government does not seem to have figured out how to fairly compensate developers as per the terms of their contracts,” says Arun Lakhani, CMD, Vishvaraj Infrastructure Limited (VIL). VIL has two toll projects that have been affected. One of them is Warora Chandrapur Ballarpur Toll Road Limited – a joint venture with IL&FS Transportation Networks Limited (ITNL) and Diva Media Private Limited. This project gets about R47 crore from toll collections annually. The other project is Malegaon Manmad Kopargaon Infrastructure and Toll Road Private Limited and is a joint venture with Essel Group. It collects about R35 crore annually.

Moreover, for arriving at the compensation due on account of exempting the state-owned buses from paying toll, the calculations have hit a road block. Since developers did not submit any cash flows separately for buses (it was part of heavy motor category), the PWD wants the developers to go to bus depots and get the data signed by each depot as to how many buses have used their toll route.

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