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CAG raps Maha for continued fuel cess collection in Mumbai

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The Comptroller and Auditor General (CAG) has slammed the Maharashtra government for continuing to collect fuel cess in Mumbai and adjoining areas despite recovering the cost of construction of flyovers in November 2010 itself.

The CAG said the government should consider discontinuing the cess as the “excess cess burden” on the public was not financially justified.

The CAG said this in its report tabled in both the Houses of the Maharashtra Legislature today, the last day of the session.

The CAGs remarks in its report for year ended March 31, 2015, come at a time when demand is being made for exempting small vehicles from toll collection from five Mumbai entry points. At present, vehicles entering and exiting from Mumbai pay both toll and fuel cess.

The CAG report referred to the construction of 37 flyovers by state-run Maharashtra State Road Development Corporation at the total cost of Rs 1,065.25 crore between September 1997 and August 2002 on build-operate-transfer (BOT) basis.

“The state government had assigned construction of flyover projects in the city to MSRDC and the cost incurred was to be recovered through toll, advertising and fuel cess. The MSRDC constructed 37 flyovers at a total cost of Rs 1,232.95 crore and it started toll collection at five Mumbai entry points from 1999-2000 through a private contractor and has collected Rs 1058.66 crore upto October 2010,” the CAG said.

“The MSRDC also received fuel cess of Rs 536.44 crore upto March 2011,” it said.

It added that the MSRDC then awarded contract for securitisation of toll rights to MEP Infra for an upfront receipt of Rs 2,100 crore for a period of 16 years starting November 2010.

“We observed that taking into account internal rate of return of 16 per cent for the project cost, the entire project cost stood recovered in November 2010 itself. Yet, the company continues to receive fuel cess from the government. The excess cess burden of the public was therefore not financially justified,” it stated.

“We therefore recommend that government may consider discontinuation of fuel cess,” the CAG added.

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