NOW, LEVY ON PROPERTY TO FUND EXPRESSWAY

The Economic Times, 14 November 2013, New Delhi 

The government is looking to tap into real estate demand to fund a new expressway project amid a slowdown in highway construction. It is exploring the possibility of financing the Rs 12,000 crore green-field Delhi-Jaipur expressway project through a 2% surcharge on commercial and residential properties that come up along the 260-km project. The surcharge will be levied on the stamp duty that property buyers will pay to Haryana and Rajasthan governments at the time of registration. This levy — which is expected to generate Rs 5,000 crore — will be in addition to the toll that commuters pay.

Haryana government has approved in-principle the plan for new townships in Manesar, Pataudi and Rewari, while Rajasthan may allow to build new townships in Behror, Kotputli, Sahapura and Chomu. These townships will cover almost 20,000 hectares and will have exclusive links to the expressway. "NHAI acquires land. So, if we can get alternate mode of financing to take care of construction expenses the project can take off soon," said a government official.

The move comes at a time when road developers are finding it tough to raise equity and arrange bank funding.

While government officials confirmed the proposal, they said a final decision will be taken shortly. On Monday, an inter-ministerial committee will discuss the issue. The ministry is also proposing other financing models for the project without any requirement for private investment. First among these options is to provide viability gap funding (VGF), which works out to almost 42% of the project cost, to a developer who will manage the project with the revenue earned from tolling. The expected traffic on this stretch will be 25,000 passenger cars per day.

The second option is to allow the developer to collect toll on the existing Delhi-Jaipur highway after the expiry of present contracts. Concession period for Delhi-Jaipur highway will end in 2023, and Delhi-Gurgaon in 2024. "This will also address the concern of competing road projects. The developer will have the responsibility to carry out expansion of NH-8 during the contract period," said an official.