States may not get to build roads along toll highways

In a major policy initiative, state governments are expected to undertake that they will not, in principle, construct an alternate road on the same route on which a toll highway has been constructed by a private contractor.

The clause is part of state support agreements issued by the road transport ministry which are to be signed by the state governments.

The agreements have been drafted in order to give a push to public-private partnership (PPP) projects at the state level.

The Centre wants the states to take up as many projects as possible under the PPP arrangement so that infrastructure works can be completed faster.

"The agreements will help build trust in the private sector that the state government concerned will back it to the hilt once it invests in road projects," says an official.

According to sources, the contract says state governments will also have to undertake that they will not levy or impose any local tax, toll or charge on the use of the whole or a part of a highway built by a private contractor.

If any of the state governments (or its agencies concerned) fails to make good a material breach of the contract within 60 days, it would be obliged to compensate the concessionaire.

The deal states that payments due from the state government are to be made within 30 days of demand from the concessionaire and in the event of delay the state government will have to pay the concessionaire an interest of 3 per cent above the bank rate.