Toll collection in current, next fiscal to be adversely impacted as operations halted: ICRA

NEW DELHI: The government's move to stop toll collection amid the 21-days’ nationwide lockdown is set to push toll collection into the negative territory for FY 2020, while collection in April, and subsequently FY 2021, is also likely to be adversely impacted, ratings agency ICRA said on Thursday.

“Overall, the annual toll collections for FY2020 are expected to witness a decline by around 2-3%. For the month of March 2020, the decline in toll collections is estimated to be more than 40%,” the agency said in a statement on Thursday.

In a letter issued to the National Highways Authority of India (NHAI) on Wednesday, the ministry of road transport and highways said that the Ministry of Home Affairs’ order on March 24 stated that “commercial and private establishments shall be closed down for a period of 21 days with effect from 25.03.2020 for containment of Covid-19 epidemic in the country,” further asking the authority to therefore comply with the orders.


It may take one quarter for toll roads to come restore to normal traffic levels, the agency said, drawing a parallel from the demonetisation period, when toll operation had to stopped, and it took two quarters for the traffic to be restored to pre-demonetisation levels.

However, there is some relief for toll operators as the ministry has stated that the 21-day toll suspension would be treated as force majeure event.

“Under force majeure (political) event, 100% of O&M and interest costs are reimbursed for the affected period. This would cover around 50-55% of loss of revenue incurred by these projects,” Rajeshwar Burla, Vice President, Corporate Ratings, ICRA said in a statement.

A combination of compression in GDP growth along with benign inflation would adversely impact the toll collections in FY 2021. The impact would depend on the intensity, duration and spread of Covid-19 outbreak, the agency said.

Around 87% of ICRA rated toll road projects (excluding default category credits) have debt service reserve (liquidity buffer) greater than or equal to one quarter of debt obligation (includes principal and interest) and are resilient enough to absorb the toll suspension, Burla added.