ICRA sees highway toll collections dipping

Our Bureau New Delhi | Updated on April 09, 2020 Published on April 09, 2020

Decline could be 6.5-8% for FY21

Toll collections from highways for financial year 2019-20 are expected to be down by 2-3 per cent as against the previous fiscal, estimates rating agency ICRA.

This is due to three reasons — vehicles being allowed to carry more cargo due to higher axle norms, general slowdown in economy and, finally, the partial lockdown brought in by some States and the nationwide lockdown imposed by the Centre on March 25.

Toll collections for fiscal 2020-21 are expected to decline by 6.5-8 per cent against the previous year. The actual scenario will depend on how Covid-19 plays out during the year.

As per ICRA, GDP growth is estimated at 2 per cent for FY21. As far as toll road projects are concerned, the assumption is that entire April will be under toll suspension with gradual ramp-up over a three-month period between May and July, 2020, said Rajeshwar Burla, Vice-President, Corporate Ratings, ICRA, in a webinar on Thursday.

For the 21-day lockdown, when toll collections were suspended, NHAI-operated toll plazas are estimated to lose about ₹429 crore while NHAI is expected to compensate about ₹524 crore. With this, NHAI is expected to lose about ₹953 crore due to the coronavirus.

Construction takes hit

The construction sector will see degrowth in the first quarter of the current fiscal, both road and industrial construction, due to low labour availability, low traffic and lockdown due to Covid-19, said ICRA.

Road construction, during the first quarter of fiscal 2021, is expected to be severely impacted, as April will suffer due to labour unavailability, with construction labourers heading to their home towns on coronavirus fears. In subsequent months as well, construction activities are unlikely to resume immediately as labourers are expected to benefit from various schemes of the Centre and States.

Construction raw material costs are low, and remain a positive for the construction sector. However, the extent to which companies will benefit depends on the labour availability. The Indian construction sector is, by and large, labour-dependent, said ICRA.

The metro rail systems also expect to see a drop in revenues due to the lockdown, and even after lockdown due to the social distancing norms, according to the rating agency.

Published on April 09, 2020

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