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Old 25th May 2015, 14:28   #31
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Default Re: So, how much toll is actually collected on a normal busy highway?

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Originally Posted by acidkill View Post
Questions
1. Where did you get the 20 lakhs and 50 lakhs figures? Could it not be more?
http://nptel.ac.in/courses/IIT-MADRA...in%20India.pdf
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2. What about the extent of highway which is not covered between the toll booths?
Till mid 2014 about 30-40% was not done, with over 50% of flyovers just half done piles of mud.

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3. What about salaries, cleaning, repair and maintenance and insurance costs?
4. What about the bank interest that the concessionaire has to be paid? What about the depreciation of the rupee, in case the loans were dollar denominated?
5. Besides, what about the fact that the concessionaire has to make funds to bid for other projects?
Not my problem. I pay for a road, I want a road. Simple. If its not profitable then they should not have bid for the road.

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You make a fair point, but lets not jump to conclusions either. People have to understand that in this world every thing has to be viable for it to work in the long term.
What conclusions. I lost a rim and a tire to a pothole. Did NHAI refund me? No jumping to conclusions. Only jumping in potholes, traffic jams,broken road, incomplete flyover and a high amount of toll
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Old 25th May 2015, 14:51   #32
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Default Re: So, how much toll is actually collected on a normal busy highway?

Making constructive use of time when stuck in a jam at the Vashi toll bridge, a friend once came to a ballpark figure of INR 1,800 per minute as the "averaged" value per minute of collection, after considering lean hours, peak hours, normal traffic hours, by observing the average time it took for a vehicle to pass after paying toll in cash. Guess no other business in this country yields that kind of cash.

Is it a wonder then that if one were to scrutinize the concessionaire's shareholding patterns (listed, or unlisted), one may unsurprisingly find that most concessionaires have some political affiliations, if they're not out-rightly held by members of The Class. Stands to reason too, for if you generate that kind of cash, the place to burn it all at the same rate is elections, perhaps the only place where cash burns most voraciously.

However, it is heartening to know that not just our community of BHPians but fellow countrymen at large are onto this game and, more importantly, are looking at ways to prevent this literal highway robbery of the general public. The level of success will be apparent in the coming months and years, starting with baby steps in Maharashtra during the coming months, with it being scrapped for cars on a number of plazas in the state.
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Old 25th May 2015, 14:57   #33
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Default Re: So, how much toll is actually collected on a normal busy highway?

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What I am unable to understand, is why do we have to pay the toll. Money for development is collected from users at registration time, and a hefty percentage of the fuel cost are taxes. Then there is a separate cess. All in all, plenty of money (more than twice that required to make and maintain) is collected from the transport sector, but not much is plowed back.

Time that a PIL is initiated to find where the thousands of crores of rupees collected as taxes from the transport sector end up, and why a substantial amount is not used to upgrade the infrastructure.
Oh my you may unearth a pandora's box.
But first a question: how do we know that plenty of money is indeed being earned by the Govt to create that ideal road infra that we have in our minds?

Perhaps the money being earned is quite a lot, but most of it is being used to fund salaries and benefits of redundant people? Or to fund some hare brained schemes that will ensure sure shot victory in the next zila/municipality/assembly/parliament elections? (But not improve the road)

Perhaps the money is simply not enough? And that is why the Govt seeks a public-private partnership or complete private investment.
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Old 25th May 2015, 14:59   #34
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Default Re: So, how much toll is actually collected on a normal busy highway?

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Originally Posted by smartcat View Post
Gentlemen, you need to dig a little deeper into the financials. Most of the listed companies have businesses other than tolled roads.

From reading the pink papers on this topic all these years, Govt/NHAI is finding it difficult to get private companies to invest in tolled road projects. That probably means things are not going well for the owners of such projects.

http://www.hindustantimes.com/busine...1-1318285.aspx
Everything you read in the pink papers is not the truth. According to the Pink papers, Enron and Satyam were doing extremely well, before they crashed.

These toll companies generate huge amount of their turnover in cash, which is never accounted for.

If these toll companies declare all their income in white, from where will they pay the cash to their political patrons?

Some of the usual tricks being adopted by the toll operators:
1) Gross low estimates of vehicular traffic
2) Over invoicing of EPC works
3) Exaggerated spends on public amenities and emergency services
4) In accurate reporting of km's built, and number of lanes built.
5) Over inflating maintenance work contracts
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Old 25th May 2015, 15:01   #35
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Default Re: So, how much toll is actually collected on a normal busy highway?

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Please refer slide 7. i dare say that you are way off in your costing because your document is dated prior to 2003. This is 2015. Inflation has been at an average CAGR of 10% atleast in construction inputs. Not to mention the last 5 years where it went crazy. Further lets not make the mistake of basing a costing estimation on some document. Costing in Chennai will vary dramatically with any other location and so its quite localised.

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Till mid 2014 about 30-40% was not done, with over 50% of flyovers just half done piles of mud.

Not my problem. I pay for a road, I want a road. Simple. If its not profitable then they should not have bid for the road.


What conclusions. I lost a rim and a tire to a pothole. Did NHAI refund me? No jumping to conclusions. Only jumping in potholes, traffic jams,broken road, incomplete flyover and a high amount of toll
I don't know the on the ground realities of the this project. So i cannot comment.

I sympathise with your grievance. Since you are aggrieved, I would request that you approach the courts or approach the insurance company and take it up. This is your right.

But my only request is that the public in the mindset of vengeance, should not propagate Socialism as a pancea. Pre 1991, we did not even have this much. If we make generalisations on profitability of infrastructure firms, then no one will want to make infrastructure in India.
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Old 25th May 2015, 15:23   #36
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Default Re: So, how much toll is actually collected on a normal busy highway?

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But my only request is that the public in the mindset of vengeance, should not propagate Socialism as a pancea. Pre 1991, we did not even have this much. If we make generalisations on profitability of infrastructure firms, then no one will want to make infrastructure in India.
Where did socialism come into the picture. The concept of goods based on payment is a truly capitalist concept.
As for courts, well the matter has gone to the Supreme court, and new dates and deadlines and strong words are being exchanged. I dunno how that helps me though!
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Old 25th May 2015, 15:30   #37
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Default Re: So, how much toll is actually collected on a normal busy highway?

Wow. I always wonder where a lot our views as a general public are formed. I see my dad and his friends sit and discuss government policies, taxes and businessmen. Not so surprisingly, the conclusion is always that everyone involved is corrupt and fleecing the income tax department and the country!

Dont know how true it is. I am vastly under-informed to reach an informed judgement.

However, for toll roads, I do have some first hand information and would gladly share it with you all. As part of my work, I was dealing with the financial department of a large toll road developer. Normal people working in office, not the promoters or CFO etc.

Some data points based on my analysis of their numbers.
  • Average cost of construction for the toll projects (multiple projects) ranged from ~INR 1.0 Cr to ~1.5 Cr. per kilometer per lane. (Construction of a new six lane toll road costs about INR 9 Cr. per kilometer).
  • Typical promoter funding for the project was ~20% of the total project cost (before interest). Across all projects, the promoter equity was required to be provided first and then bank loans/goverment funding will start to flow.
  • Toll rates are always linked to inflation. Earlier it used to be linked to WPI but that might have changed since then. Based on actual WPI numbers as reported by RBI and the toll rate formula, toll rates for the year are fixed. Thats why we see figures of INR 21 and INR 33 instead of round numbers.
  • Some projects are annuities where NHAI or state governments give an annual payment to the developer, no matter the collections. However, most projects are tolled projects where all collections are shared between NHAI and promoters/bank.
  • A number of projects have NHAI grants or financial support. Without this support, the projects are simply no feasible. IRR (or return on the promoters money) ranged from ~(-) 12% to ~18%. Barring one project, in none of the projects was the IRR higher than 10%.

The above are just some facts. In my view, a developer takes up a lot of risk at the time of taking on a toll project. The traffic as per traffic studies may or may not materialize or in extreme cases, the toll may have to be closed due to change in political scenario. Banks will still keep charging interest and demanding repayments.

Disclaimer: My data points are also slightly dated. They are mostly based on FY13 numbers.
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Old 25th May 2015, 16:35   #38
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Default Re: So, how much toll is actually collected on a normal busy highway?

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Pre 1991, we did not even have this much. If we make generalisations on profitability of infrastructure firms, then no one will want to make infrastructure in India.
The government of India and its responsible departments were either incompetent or were not answerable to anyone in Pre 1991 era. Also the information flow was not that transparent and thus we did not know if the taxpayer's money is being used to build roads or maintain minister'd travel expense.

Profitability is one thing and being a parasite is another. It is not the question of want to or not want to, the government have to make infrastructure in India,
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Old 26th May 2015, 02:54   #39
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Default Re: So, how much toll is actually collected on a normal busy highway?

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Average cost of construction for the toll projects (multiple projects) ranged from ~INR 1.0 Cr to ~1.5 Cr. per kilometer per lane. (Construction of a new six lane toll road costs about INR 9 Cr. per kilometer).
Is it possible for you to provide some break-ups for this costing? Prima facie it looks like an astronomical figure.

It would cost way less than 9 Cr to buy a highway-side* 1 acre plot of land and build a lavish farmhouse on it. Why should it cost that much to build a highway which is nothing but rocks and tar and maybe a small divider?


*I'm talking about somewhere in the countryside and not inside cities.
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Old 26th May 2015, 10:44   #40
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Default Re: So, how much toll is actually collected on a normal busy highway?

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Is it possible for you to provide some break-ups for this costing? Prima facie it looks like an astronomical figure.

It would cost way less than 9 Cr to buy a highway-side* 1 acre plot of land and build a lavish farmhouse on it. Why should it cost that much to build a highway which is nothing but rocks and tar and maybe a small divider?


*I'm talking about somewhere in the countryside and not inside cities.
Fair point. I will try and dig out a break-up for the cost. For the time being, consider this, a kilometer long highway with 6 lanes (and shoulders and a media) will be about 60 meters wide. That's ~60,000 sq. meter of land or about 14.8 acres (conversion if 1 acre = 4046.8 sq. meters). If the land cost around that highway is INR 30 lacs per acres, land alone will cost ~4.45 crores.
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Old 26th May 2015, 10:58   #41
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Default Re: So, how much toll is actually collected on a normal busy highway?

Whatever figures we get are always fake, that's the most sad part. When they say they collected 100 crores, in actual that amount is more than 150-200 crores. I don't have to tell where that money is going. Its a lobby & all are involved in it including company which constructs the road, collects the toll, government officials, people who collects the toll etc. If actual money collected is calculated properly then we have to pay less toll and also quality of highways will be much better. Sadly its not happening :(

Just take example of Maharashtra. There were several drama happened over collection of toll in past few years. For few days they create drama & creates hype, media shows it live in news. They claim they will count how much toll is getting collected everyday actually & what not. After few days, everybody is silent, no one talks about it. Why so?? Because deal is done and issue is settled. It has become good business for some politicians, sadly.

If proper toll collection is done, toll will be less or it will be finished within few years. But who wants it? Politicians & corrupt officials want this recurring money which is generated every day, every month & every year. Its a HUGE amount i know. We can get much better infrastructure if it is utilized properly.
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Old 26th May 2015, 14:14   #42
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Default Re: So, how much toll is actually collected on a normal busy highway?

Thank you for this thread. However I feel that all this toll collection is a complete scam to rob us of our hard earned money.

First, while buying a new car, we are charged road tax, environmental tax etc. Top it up with tolls, green tax (tourist places), entry tax (e.g. entering Mumbai). Why can't the govt get rid of either of the two? Either charge us for road tax or tolls but not both. As it is since the govt is keen on private infrastructure contractors who charge toll, what happens to the road tax collected is anyones guess.

Again and again this issue is being raised and the main contention is that we do not get the services we pay for. Being stuck in long jams, pot-holed roads etc. I guess we have simply become accustomed to this way of life. But there will come a time when the common man will get frustrated and tired and will try to take matters into his own hands (Kolhapur incident) and then what ? I hope the govt realizes this soon and amends its ways.
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Old 26th May 2015, 17:17   #43
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Default Re: So, how much toll is actually collected on a normal busy highway?

My understanding is that most, if not all projects under N-S, E-W and GQ corridors are under a 30 year Build- Operate- Levy - Transfer (BOLT) deal with NHAI. However, the toll rates for the same is decided by NHAI.

In that case, it is understandable that toll on a particular road will continue even after the initial investment is recovered.

Non maintenance of the roads and lack of proper signage's and facilities is a separate issue. Consider the Bangalore - Krishnagiri -Walajpet - Chennai section of the GQ. The road condition, signage's and facilities on Krishnagiri - Walajpet section is beautifully maintained by L&T. However, Bangalore - Krishnagiri and Walajpet - Chennai which is under other concierges is always in bad condition.

Now, over a period of time ,a company which is maintaining the roads in good condition and collecting toll as per rate fixed by NHAI (understandably so) may find it tough to match the rates quoted by an unscrupulous companies. I guess this may be the reason many of the NHAI bids are not finding takers.
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Old 26th May 2015, 19:03   #44
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Default Re: So, how much toll is actually collected on a normal busy highway?

When I used to work with a consultancy firm, designing roads, this is what a road used to cost four years back
. Single lane = 3.5m CW + 2x1.5m Shoulders + 2 x 1m earthern shoulders ~ 50L/km
. Two lane = 7m CW + 2x1.5 shoulders + 2 x 1m earthern shoulders ~ 125L/km
. 4 lane ~ 300L/km, including 5m central verge

The rates for wider roads are more as the carriageway is thicker to accommodate higher load. As roads are designed for a cumulative axle load for 20 years life, costs for higher density roads are proportionately higher.

This assumed that there would be around 6 culverts/km, 1 minor bridge every 5 km and 1 major bridge every 30-40km.

The current rates are upwards of 150L/lane/km, which means a 6 lane highway would cost 9cr/km, hence a 60km stretch (normal length under one toll plaza) would cost upwards of 550 crores.

Regarding widening from 2 lanes to 4 lanes, 4 lanes to 6 lanes and 6 lanes to 8 lanes, the cost are at the most 40% less and at times same as building a new carriageway. That is because the extra width requires extensive widening of culverts and bridges, and relaying the existing stretches with bituminous layers (which are the most expensive component of a carriageway). In most of the cases; unless the road is a private road; the cost of land acquisition is borne by the owner, in this case the government.

If you have been following the progress of road construction, you will notice that after an initial euphoria, there are very few takers for BOT roads. The reason is that unless the road has huge traffic and short length (DND), or major bridges (Surat), recovering the capital and periodic maintenance costs is difficult if you depend only on the toll revenue. That is why the current thought is to commercialize the open areas along the road to augment the operator's revenue stream.

Last edited by Aroy : 26th May 2015 at 19:06.
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Old 27th May 2015, 16:10   #45
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Default Re: So, how much toll is actually collected on a normal busy highway?

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When I used to work with a consultancy firm, designing roads, this is what a road used to cost four years back
. Single lane = 3.5m CW + 2x1.5m Shoulders + 2 x 1m earthern shoulders ~ 50L/km
. Two lane = 7m CW + 2x1.5 shoulders + 2 x 1m earthern shoulders ~ 125L/km
. 4 lane ~ 300L/km, including 5m central verge

The rates for wider roads are more as the carriageway is thicker to accommodate higher load. As roads are designed for a cumulative axle load for 20 years life, costs for higher density roads are proportionately higher.

This assumed that there would be around 6 culverts/km, 1 minor bridge every 5 km and 1 major bridge every 30-40km.

The current rates are upwards of 150L/lane/km, which means a 6 lane highway would cost 9cr/km, hence a 60km stretch (normal length under one toll plaza) would cost upwards of 550 crores.

Regarding widening from 2 lanes to 4 lanes, 4 lanes to 6 lanes and 6 lanes to 8 lanes, the cost are at the most 40% less and at times same as building a new carriageway. That is because the extra width requires extensive widening of culverts and bridges, and relaying the existing stretches with bituminous layers (which are the most expensive component of a carriageway). In most of the cases; unless the road is a private road; the cost of land acquisition is borne by the owner, in this case the government.

If you have been following the progress of road construction, you will notice that after an initial euphoria, there are very few takers for BOT roads. The reason is that unless the road has huge traffic and short length (DND), or major bridges (Surat), recovering the capital and periodic maintenance costs is difficult if you depend only on the toll revenue. That is why the current thought is to commercialize the open areas along the road to augment the operator's revenue stream.
Thank you for the cost breakup. However, is this cost of 1 km for 9 crs, valid for tarred roads or concrete roads?
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