Sunil Jain: Wait for the final Gurgaon bill!

RATIONAL EXPECTATIONS

Right now, thanks to the huge pileups at the two toll plazas on the Delhi-Gurgaon expressway, ranging from half an hour to an hour and more, the public's ire has been directed at DS Constructions, the concessionaire. And not without reason, for DS has proved to be completely incompetent. First, it never got the traffic flow even remotely right and 130,000 users turned up on the first day "" this was the projection for 2013! Given that a single toll plaza gate can at best clear just 180 vehicles an hour, its 18 toll gates can clear just 3,240 cars an hour as compared to the flow of 10,800 assuming the cars come in evenly over 12 hours! They don't, and that makes things worse. Second, since the pileups occur at the gates, the ideal solution would be to get more people on to contact-less swipe cards or those which recognise cars from a distance and allow them to pass through without stopping and creating traffic pileups "" DS claims to have just 20,000 users on smart cards so far. Given the way the traffic is increasing, if this isn't addressed, the queues will probably increase to a few hours "" DS' concession is for 20 years!

Yet the real culprit is the National Highway Authority of India (NHAI), to which the road belongs. DS is only a concessionaire and the reason why we're in this mess today is because the NHAI just didn't do its homework. That apart, the final cost of the expressway will be known only when DS puts in its legitimate claims for damages, and these could run between Rs 500 crore and Rs 1,000 crore, but more of that in a minute. In any case, how are millions of small users of the road supposed to take up cudgels against DS "" the bigger scandal is that the NHAI has not taken any action.

The crux of the problem lies in the fact that the NHAI has, till date, not come up with a detailed concession agreement that specifies the rights and obligations of concessionaires of various roads. Sure, the standard agreement has specifications of how much bitumen and other materials need to be put into the road construction, on how construction material on the roads has to be cleared up, and even the fact that a PR unit has to be set up to interact with the public, the media and others "" clearly someone with foresight realised a Gurgaon-type disaster was waiting to happen! But meaningful specifications, for those who have to wait for an hour twice a day, are those that specify how much of a wait is permissible under the contract, linkages between the number of lanes in the toll plaza to traffic forecasts (so many toll booths in year one, going up to so many in five years ...), perhaps even ratios of what proportion of traffic should be on smart cards which recognise cars from a distance.

When pushed, NHAI officials will point to a clause in the concession agreement (the NHAI site has a general concession for projects above Rs 100 crore, not a specific one for the Gurgaon expressway) that says the concessionaire must provide "smooth and uninterrupted flow of traffic during normal operating conditions". If, though it's doubtful, this clause is sufficient, why hasn't the NHAI directed DS to stop all tolling operations and allow traffic to pass through freely till a solution is found? After all, you pay a toll because you save time, and in this case that's not happening.

Related to this lack of homework is the fact that the NHAI kept changing the design of the expressway long after the contract was signed, in some cases even two years afterwards "" DS was told, for instance, that the section at Rao Tula Ram Marg was to be made into an elevated one. This may well have been required, but two years into the contract? DS is within its rights to charge the NHAI for not just the additional cost this resulted in, but also for the loss in its business. Under the contract, DS' tolling period begins the day the contract is signed. So, if changing the scope of the project delayed it by, as it did, around three years, DS has lost three valuable years of tolling. And since the earlier years of tolls have a higher value than tolls in later years, the loss is that much more.

Even more serious perhaps is the lapse in getting more up-to-date estimates of traffic "" the Rail India Technical and Economic Srvices (RITES) one was done in 1998 and was clearly inadequate the way Gurgaon was growing (didn't anyone in the NHAI see this?). Apart from the fact that the current pileups are due to this, dramatically lower traffic projections meant the bidders assumed the project was a lot less lucrative than it actually was "" this means the NHAI could have got a lot more revenue from the project. So, when the traffic snarls get worse, and DS comes up with its final bill, reserve your anger for the NHAI.