NHAI's relief measures for road developers inadequate: ICRA1 min read . Updated: 02 Jun 2020, 08:54 AM IST
- The measures do not adequately compensate for the losses incurred by majority of operational developer-run road projects
- The government had suspended the collection of toll tax on all national highways during 26 March-19 April
MUMBAI: Relief measures announced by the Ministry of Road Transport and Highways (MoRTH) are insufficient for road developers who did not collect toll tax for 25 days due to the nationwide lockdown, according to credit rating agency, ICRA.
The government had suspended the collection of toll tax on all national highways during 26 March-19 April.
In net present value terms, the measures do not adequately compensate for the losses incurred by majority of operational developer-run road projects, ICRA said.
According to ICRA’s estimate, the total operations and maintenance (O&M) expenses and interest costs for the build-operate-transfer (BOT) toll concessionaires for the 25-day period of toll suspension is estimated at ₹649 crore.
The relief package announced by the National Highways Authority of India (NHAI) for BOT toll concessionaires has two parts--the revenue loss during and after toll suspension period will be compensated in form of extension by three-to-six months in concession period and a coronavirus loan is provided for concessionaires where relief is not granted under Reserve Bank of India's (RBI) loan moratorium.
Many BOT concessionaires have already opted for loan moratorium on their project debt, and thus, in such cases, the quantum of covid-19 loan eligibility is not significant.
“NHAI seems to have taken a different approach when compared to the toll suspension during demonetisation period, when it compensated the concessionaires for the interest and operations costs," Rajeshwar Burla, vice president, corporate ratings, ICRA said in the note.
This approach may become contentious with concessionaires disputing the proposed relief measures, Burla added.