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30p extra cess on fuel mooted for road projects

BS Economy Bureau in New Delhi

The ministry of road transport and highways has proposed the levy of an additional cess of 30 paise per litre on petrol and diesel to bridge the Rs 1,800 crore (Rs 18 billion) shortfall in funding the National Highway Development Project.

"For meeting the cost of the second phase, we have proposed an additional cess," minister of state for road transport and highways B C Khanduri said on the sidelines of a conference on highway development on Monday.

At present, the government levies a cess of Re 1 per litre on petrol and diesel to part-fund the Rs 58,000 crore (Rs 580 billion) highway development project, which involves widening 14,162-km of national highways by December 2007.

The first phase of the project, called the Golden Quadrilateral, connecting the four metropolises of Delhi, Mumbai, Chennai and Kolkata, is scheduled for completion by December 2003.

"We have given our assessment of the likely shortfall in funds for the second phase," he said.

Khanduri said funding for the entire project had been budgeted through cess (Rs 20,000 crore), external assistance (Rs 20,000 crore), market borrowings (Rs 10,000 crore) and private sector participation.

Of 7,300 km under the north-south and east-west corridors, 800 km are already widened to four lanes and 686 km are under implementation. The rest 5,812 km were to be awarded in the next three years, Khanduri said.

"NHDP is expected to generate employment for 250,000 construction workers and 10,000 supervisors per day. This will work out to 180 million man-days by December 2003 for the first phase of the NHDP," the minister said.

Moreover, the annual requirements of cement and steel would be of the order of 4 million tonnes and 300,000 tonnes, respectively, for the Golden Quadrilateral alone, Khanduri said.

"According to a World Bank study, the savings of fuel and vehicle maintenance costs on the Golden Quadrilateral alone, when completed, would be over Rs 8,000 crore (Rs 80 billion) every year," he said adding that the NHDP would give a boost to the country's economy by providing direct and faster access from the hinterlands to marketing centres.

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