Karnataka Govt to develop highway roads as private bidders shy away
Private players have kept away from bidding for highway projects in Karnataka since the Public-Private Partnership (PPP) arrangement for carrying out these projects appears unattractive from their perspective. The primary reason for this lack of interest is due to the fact that the ban on mining activity in Karnataka has resulted in traffic volumes dipping considerably. Besides, the high rates of interest charged by banks on funds lend towards these projects has also resulted in private players keeping away from these projects.
Ban on mining forces state govt to take up highway projects:
Toll charges along these roads were proposed when mining activity was going on in full swing in the vicinity. The revenue generated from such toll charges was diverted towards the maintenance of roads used by the mining company vehicles in the transportation of iron ore extracts to ports. Considering that mining has been temporarily banned in the state, the state government is planning to develop and maintain these roads until mining resumes in the state.
N.Karnataka to feature in more than 60% of road investments:
The issue of bad roads was raised by many industrialists in the state at the recently held Global Investors’ Meet. To address their concerns, the state government has taken upon itself the onus of providing better infrastructure in such areas where it was lacking. Considering that more than 60% of the road investments were promised for North Karnataka, it was decided that toll charges would be imposed on most of the highway projects that were being undertaken in this region.
Toll operations initiated for four state highway projects:
As yet, only four highway projects from among the 12 that have been opened for toll collection, have attracted bidders. The 141-km Vagdhari-Ripponpalli highway project connecting Karnataka, Maharashtra and Andhra Pradesh near Gulbarga has already started toll operations. Meanwhile, private companies have expressed their interest in pursuing three other highway projects. They include the 60-km long Dharwad-Alnavara-Ramanagara SH-34, the 74-km long Chikkanayakamahalli-Tipatur-Hassan SH-71, and the 83-km long Ginigere-Gangavathi-Sindhanur SH-23.
Provision available for toll collection; but govts hesitent:
Incidentally, there is the provision as per Section 194 of the Karnataka State Highways Act, 1964, that empowers the Karnataka Road Development Corporation Ltd (KRDCL) to collect toll charges. However, fearing a backlash from the electorate, no government of the state in the last 48 years has had the gumption to impose toll charges for highway development projects in the state.
KRDCL takes loans from World Bank and HUDCO:
The KRDCL, in the last six years, has completed development work on about 2,000 km of state highways. The cost incurred in this regard amounted to almost Rs.3,000 crore, primarily raised through loans extended by the World Bank and HUDCO. Since the government has to repay these loans with interest, it was imperative that they impose toll charges on the users of these highway roads.
