Panel says NHAI swerved procedure for benefit of private player

government to review its policy of first putting projects on bid under the BOT-toll mode failing which they are put on BOT-annuity failing which the government takes on the project.

In its report tabled in Parliament today,the committee headed by V Kishore Chandra S Deo has said that the NHAI did not conduct traffic studies before converting the project from the special purpose vehicle (SPV) mode or government funding mode to toll mode. This has led to the flow of excess revenue of Rs 187.77 crore into the hands of the private concessionaire. As the authority had no reasonable system to compute a reasonable concession period the developer landed itself with six years of extra concession period leading to the additional revenue gain from toll.

The report further states that the NHAI made no comparative study between BOT-toll and BOT-annuity before awarding the project to a private developer,which should have been done as the developer has managed to collect over Rs 200 crore in the first 20 months since its commencements. The total cost of the project is Rs 555 crore and a concession period of twenty years as against that of 14 years has been worked out as appropriate given that the project had an internal rate of return (IRR) of roughly 20 per cent.

In view of this strong discrepancy and oversight by the NHAI the committee has recommended the government to either make the road toll free to provide respite to commuters or ask the developer to share the revenue with the government. In the annuity mode the government collects the toll and makes a fixed payment to the developer on an annual basis. Under BOT toll mode the concessionaire builds the road and maintains it for a fixed period.

In addition,it has said that detailed project report (DPR) of the project remained deficient in various aspects and internal guidelines on execution of the project were also lacking. Many critical items at the time of preparation of the DPR were omitted which resulted in execution of those items under the change of scope of work adding a cost of Rs 146.62 crore or raising total project cost by 21 per cent. Other observations of the committee point out that the developer started toll collection before the final completion certificate was issued. A provisional completion certificate was issued on January 23,2008 and toll collection started on January 25,2008 before completing the list of items found to be pending by the independent consultant post which the completion certificate is issued.