State governments that create conditions for removal of toll charges may have to take a cut in the share of the Central Road Fund they get to make up for the losses in toll collections, highway sector officials have indicated.

Multiple stakeholders in the highways sector, including government officials and private firms, cited instances of some State governments not honouring the support agreements signed with the National Highways Authority of India (NHAI) in spirit, adding that this impacted investor sentiment.

“Tamil Nadu and Telangana are yet to sign the State support agreement. But even States that have signed such agreements do not honour them in spirit and unilaterally issue orders that run contrary to the agreement. Even a progressive State, such as Maharashtra, has decided to stop charging tolls for certain category of vehicles,” said NHAI Chairman Raghav Chandra, addressing a FICCI event here on Tuesday.

Chandra said he has written to State governments on the issue, and in such instances, the loss of toll revenue would be deducted from the Central Road Fund that accrues to the States.

The NHAI chief also said that to help complete some projects, there is a clause that allows fund infusion by the Authority, provided banks allow it to have the first charge. “I will be writing to the banks seeking first charge for NHAI from the toll revenues received. Otherwise, if the NHAI were to terminate such projects, banks will be in a worse position,” he added.

Echoing similar sentiments, Sudhir Hoshing, IRB Infrastructure’s Joint Managing Director, said when foreign investors are approached, they express concern over an atmosphere of resistance to pay toll charges in the country. “A clear statement of intent saying that toll has to be paid is important…People living in the vicinity are not even ready to pay ₹100-150/ month as toll,” he added.

India Infrastructure Finance Company Ltd’s Chairman and Managing Director SB Nayar pointed out that from a lender’s perspective, toll collection is the main cash flow.