Only one-fourth of the road assets moved out of rough patch, post default: ICRA

Highlights:

Monetisation/sale of asset was the most preferred way for assets resolution
Around ₹42,000 crore of debt is still in default or terminated for which settlement is yet to happen

ICRA has conducted a study of 1201 Build-Operate-Transfer (BOT) road projects which have defaulted during the period FY2011 – FY2022. Out of the 120 projects, 86 have defaulted during the operational phase while 34 projects defaulted during the construction phase. In case of operational projects, majority (~57%) of the defaults are on account of lower-than-estimated traffic; 24% are attributable to authority (delay in annuity/grant payments, suspension/exemption of toll collections); and 19% of the defaults are solely attributable to sponsors (non-maintenance of road stretch, regulatory hindrances due to sponsor issues, and deterioration in credit profile of sponsor/cash outflow from SPV). Deterioration in financial profile of sponsor and delay in securing RoW are the primary reasons for defaults in under-construction projects.

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