Exemption on toll plazas: Pvt players to lose Rs 460 cr

Vijay C Roy

Tribune News Service

Chandigarh, November 16

With the government extending the exemption on toll plazas till November 18 due to demonetisation of Rs 500 and Rs 1,000 currency notes, the estimated loss to the toll plazas across the country operated by private players is pegged at Rs 460 crore for the 10-day period.

The average daily collection is Rs 40 lakh and there are 115 toll plazas of the National Highways Authority of India (NHAI) operated by private players.

The NHAI had exempted tolling on its stretches initially till November 11, which was later on extended to November 18.

The loss of toll revenue for the 10-day period is expected to result in significant liquidity stress for most of the road projects.

Shubham Jain, vice-president, ICRA Ltd, said “Most road projects have been operating on a low buffer owing to various factors such as low base traffic/ traffic growth, high premium payments and modest toll rate hikes on account of prevailing low wholesale price inflation over the past few years. In this scenario, loss of at least one-third of the monthly toll revenue is likely to result in inadequate cash flows to service the debt commitments for November and December 2016. Moreover, even when the toll plazas start collecting charges after November 18, the traffic levels are expected to remain lower initially on account of the overall low economic activity.”

The NHAI has announced partial compensation to the developers for the loss of toll revenue. According to ICRA, the Concession Agreement (CA) provides adequate safeguards against such losses and the developers are likely to apply for compensation under the Change in Law provision.

“ICRA expects that the NHAI may opt for cash compensation instead of extension of concession, considering the developers’ financial stress. Nevertheless, there is a significant uncertainty regarding the quantum, mode and timing of such compensations,” Jain said.

In addition to the national highways, many states have also exempted tolling on the state highway stretches. He said ICRA will continue to monitor the developments with regard to re-commencement of tolling and compensation payments and take appropriate rating actions once more clarity emerges on the same.