Relief Package is insufficient for road developers: ICRA

The credit rating agency, ICRA in a recent announcement said that the relief measures extended by the Ministry of Road Transport and Highways (MoRTH) are insufficient for road developers who did not collect toll tax for 25 days due to the nationwide lockdown. The government had suspended collection of toll tax on all national highways during 26 March to 19 April. Accordi ng to ICRA, in net present value terms, the measures do not adequately compensate for the losses incurred by a majority of the operational developer-run road projects. It estimates the total operation and maintenance (O&M) expenses and interest costs for the build-operate-transfer (BOT) toll concessionaires for the 25-day period of toll suspension at ₹649 crore. The relief package announced by NHAI for BOT toll concessionaires has two parts: the revenue loss during and after toll suspension period will be compensated by an extension of 3-6 months in the concession period and a coronavirus loan provided for concessionaires where relief is not granted under RBI's loan moratorium. Many BOT concessionaires have already opted for loan moratorium on their project debt, and thus, in such cases, the quantum of Covid-19 loan eligibility is not significant. It added that NHAI seems to have taken a different approach compared to the toll suspension during demonetization, when it compensated the concessionaires for the interest and operations costs. Vice President, Corporate Ratings, ICRA, Rajeshwar Burla, said, that this approach may become a contentious issue with concessionaires disputing the proposed relief measures.