40-day lockdown: NHAI loss estimated at ₹1,822 crore due to toll suspension

Our Bureau Hyderabad | Updated on April 15, 2020 Published on April 15, 2020

A view of NHAI’s toll plaza near Chennai   -  THE HINDU

NHAI may have to take an estimated loss of ₹1,822 crore due to the 40-day Covid-19 lockdown.

With goods traffic, both inter and intra-State allowed to ply from April 20, in case the toll suspension is revoked with effect from April 20, the loss could reduce to ₹1,181 crore, according to estimates by rating agency ICRA.

The revenue loss for NHAI-operated toll plazas is estimated at ₹821 crore, while the compensation to BOT Concessionaires under force majeure (political) event is estimated at ₹1,001 crore

The Ministry of Road Transportation and Highways has suspended tolling on all national highways, following the 21-day lockdown as per Ministry of Home Affairs guidelines, which now got extended by another 19 days up to May 3.

As per the Ministry circular dated March 25, the toll suspension would be treated as force majeure event and thereby results in a loss to NHAI.

Rajeshwar Burla, Vice-President, Corporate Ratings, ICRA, says, “There are around 570 operational toll plazas on the national highways across the country, which include both public funded (under NHAI) and projects under build-operate-transfer (BOT) (Toll) and toll-operate-transfer (TOT) mode."

For the BOT Toll and TOT projects, under force majeure event, the revenue loss is compensated in the form of extension in concession period. In addition, 100 per cent of operations and maintenance (O&M) and interest costs are reimbursed for the BOT Toll projects for the affected period; this would amount to 50-55 per cent of loss of revenue incurred by these projects. For projects that are public-funded (currently being tolled by NHAI through toll contractors), the suspension would result in a direct revenue loss for NHAI.

The loss to NHAI is only on account of disruption to operational toll road projects, the additional burden on account of compensation for under-construction EPC and HAM projects has not been considered in these calculations.

The total amount of toll collected through the 570 plazas in FY2019 stood at ₹24,396 crore averaging ₹66.84 crore per day, which was assumed to increase at 3 per cent thereafter. Drawing parallels with demonetisation in November 2016, ICRA note says that after the 24-day period toll suspension post demonetisation, NHAI offered compensation to the toll road SPVs under force majeure political clauses and incurred loss in the range of ₹650-700 crore.

Published on April 15, 2020

A letter from the Editor

Dear Readers,

The coronavirus crisis has changed the world completely in the last few months. All of us have been locked into our homes, economic activity has come to a near standstill. Everyone has been impacted.

Including your favourite business and financial newspaper. Our printing and distribution chains have been severely disrupted across the country, leaving readers without access to newspapers. Newspaper delivery agents have also been unable to service their customers because of multiple restrictions.

In these difficult times, we, at BusinessLine have been working continuously every day so that you are informed about all the developments – whether on the pandemic, on policy responses, or the impact on the world of business and finance. Our team has been working round the clock to keep track of developments so that you – the reader – gets accurate information and actionable insights so that you can protect your jobs, businesses, finances and investments.

We are trying our best to ensure the newspaper reaches your hands every day. We have also ensured that even if your paper is not delivered, you can access BusinessLine in the e-paper format – just as it appears in print. Our website and apps too, are updated every minute, so that you can access the information you want anywhere, anytime.

But all this comes at a heavy cost. As you are aware, the lockdowns have wiped out almost all our entire revenue stream. Sustaining our quality journalism has become extremely challenging. That we have managed so far is thanks to your support. I thank all our subscribers – print and digital – for your support.

I appeal to all or readers to help us navigate these challenging times and help sustain one of the truly independent and credible voices in the world of Indian journalism. Doing so is easy. You can help us enormously simply by subscribing to our digital or e-paper editions. We offer several affordable subscription plans for our website, which includes Portfolio, our investment advisory section that offers rich investment advice from our highly qualified, in-house Research Bureau, the only such team in the Indian newspaper industry.

A little help from you can make a huge difference to the cause of quality journalism!


Support Quality Journalism
This article is closed for comments.
Please Email the Editor
You have read 1 out of 3 free articles for this week. For full access, please subscribe and get unlimited access to all sections.