Losses on account of toll exemptions in the wake of banning of higher denomination notes are expected to be about Rs 460 crore for ten days period, ICRA said today.
"Loss of toll revenues for around 115 toll projects of NHAI operated by private players is estimated to be in the range of Rs 460 crore for the ten days period," ICRA said in a statement.
To avoid traffic snarls, NHAI had exempted tolling on its stretches initially till November 11, 2016, which has been 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 rated road projects, except the ones with a sizeable accumulated surplus and/or structural features like availability of Debt Service Reserve Account (DSRA)," the statement said.
These projects constitute a very small percentage of the operational projects and hence the credit impact on the sector can be substantial.
Shubham Jain, Vice-President, ICRA, said: "Loss of at least one-third of the monthly toll revenues is likely to result in inadequate cash flows to service the debt commitments for November and December 2016. Moreover, even post commencement of the tolling, the traffic levels are expected to remain lower initially on account of the overall low economic activity."
With average daily collection ranging between Rs 40 lakh, the loss of toll revenues for around 115 toll projects of NHAI operated by private players is estimated to be in the range of Rs 460 crore for the ten-day period.
The Concession Agreement (CA) provides adequate safeguard against such losses and the developers are likely to apply for compensation under the Change in Law provision (compensation if aggregate financial impact exceeds the higher of Rs 1 crore and 0.5% of realisable fee) and the Force Majeure clause (extending the concession by the number of days the force majeure was prevalent), it said.
It stated that NHAI may opt for cash compensation, instead of extension of concession, considering the developers' financial stress.
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