The Hindu Business Line : Part-funding of NHDP Phase-II: More cess on petrol, diesel likely

The announcement of an additional fuel cess is expected to come during the later part of the next fiscal. The second phase of NHDP will have an aggregate length of 6,584 km and is estimated to cost around Rs 30,000 crore, roughly of the same size as NHDP Phase-I.

NEW DELHI, March 15

AN additional fuel cess of 0.50 paise per litre on petrol and diesel is on the anvil to part-fund the second phase of the National Highways Development Project (NHDP).

"The announcement of an additional fuel cess is expected to come during the later part of the next fiscal'', Government sources said.

The Government is already collecting a cess of Re 1 per litre on petrol and diesel, respectively to part-fund the 13,000-km-long NHDP.

The National Highways Authority of India (NHAI) has started inter-ministerial consultations for drafting the plan on the second phase of the NHDP comprising the North-South and East-West corridors for the consideration of the Union Cabinet.

The beginning of spade work for NHDP Phase-II comes close on the heels of the completion of award of contracts for the first phase of NHDP totalling 5,846 km.

This comprise the Golden Quadrilateral linking the four metros of Delhi, Mumbai,Chennai and Kolkata, port connectivity and a small portion of the corridors.

The second phase of NHDP would have an aggregate length of 6,584 km and was estimated to cost around Rs 30,000 crore, roughly of the same size as NHDP phase I, the sources said.

The inter-ministerial consultations involve agencies such as the Planning Commission, Ministries of Road Transport & Highways, Finance and Law.

Similar to Phase-I, the funding for the second phase of the project will come in the form of assistance from multi-lateral funding agencies such as the World Bank, Asian Development Bank, JBIC, market borrowings by the NHAI with the Government guarantee and other innovative financing schemes such as the annuity and shadow tolling methods.

For financing Phase-II of NHDP, the NHAI has sought an enhanced support from the Union Government through a doubling of its portion of the fuel cess receipts now worth Rs 2,000 crore.

"The NHAI has requested the Finance Ministry to increase the cess component to Rs 4,000 crore from the present level of Rs 2,000 crore to part-fund the second Phase of NHDP'', they said.

The Finance Ministry could either increase the allocation to NHAI out of the total cess receipts totalling over Rs 5,000 crore or impose an additional cess of 0.50 paise per litre for petrol and diesel which would fetch an extra Rs 2,000 crore to be passed on to the authority for funding the second phase of NHDP, the sources said.

Though, the Finance Minister, Mr Yaswant Sinha, skipped the introduction of an extra cess on petrol and diesel to fund NHDP Phase-II, the NHAI is encouraged by his announcement that funds for this phase would be fully tied-up during the current fiscal when the proposal was taken to the Cabinet, they said.

Like Phase-I, the second phase of NHDP will be first considered by the Public Investment Board (PIB) and submitted to the Cabinet Committee on Economic Affairs (CCEA) along with its recommendations.

Following CCEA approval, the NHAI Board would be empowered to clear individual projects and packages on its own without reverting to the Cabinet for approval to expedite the award of contracts within a given time-frame, the sources said.

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