29 January 2021, New Delhi: ICRA Ratings has said that around 52 toll plazas [includes both public funded and BOT (built, operate and transfer)] for national highways (NHs) operated in Punjab, Haryana and Delhi-NCR have been directly or indirectly affected due to farmers protests. Apart from this, the revenue loss in the State Highways Projects in these regions will be an additional burden. On September 27, 2020, the three Farm Acts† were passed in the Parliament. These acts have been facing strong protests from the farmers of Haryana and Punjab since June 2020 and have intensified from October 1, 2020 onwards, with rail and road network obstructed majorly in the states of Punjab, Haryana and Delhi-NCR.
While the impact on fee collection at some of the toll plazas has begun from October 2020 onwards; however, this has intensified to no fee collection (free movement of vehicles) at all toll plazas in Haryana, Punjab and Delhi-NCR since December 12, 2020. Shedding more light on the impact on toll collections, Mr. Rajeshwar Burla, Vice President, Corporate Ratings, ICRA, said, “The average toll collection per day at these plazas is estimated at Rs. 7 crore. Until January 26, 2021, these national highway toll plazas would have incurred an estimated revenue loss of around Rs. 560 crore out of which ~Rs. 410 crore is estimated for BOT Concessionaires. Out of the Rs. 9,300-crore of impacted rated debt, ~Rs. 8550-crore of debt is at a high risk of default while Rs. 750 crore is rated as investment grade with low to moderate risk of default. Some of these entities also have debt service reserves (DSRAs) of around three months in place to use for such exigencies; however, this would have been completely used up by now.”
The inability to collect toll for a continuous period of 24 hours and exceeding an aggregate period of seven days in an accounting year due to agitations/ strikes would be considered an indirect political event under the force majeure clause. In such cases, with the costs attributable to such events, beyond the insurance cover, one half of such excess amount is likely to be reimbursed by the National Highways Authority of India (NHAI), covering around 25% of the loss of revenue incurred by the affected projects. As per ICRA estimates, this would amount to around Rs.100 crore until January 26, 2021. Further, the concession period shall be extended in proportion to the loss of fee on a daily basis.
As for the impact on the ratings for ICRA-rated BOT (Toll) road portfolio, three entities have been impacted by the farmer protests, out of which two had been rated in the default category even before the farm protests, while the third (rated [ICRA]BBB-(Stable)) has support from a stronger parent. “The performance of toll road projects has remained subpar in Q1 FY2021 due to the impact of the Covid-19 pandemic. While the toll collections witnessed a marked improvement starting Q2 FY2021; with this farmer agitation, the toll road projects in Punjab, Haryana and Delhi-NCR region are expected to be impacted severely, resulting in a steep decline of around 30-35% in toll collections in FY2021 (when compared to 5-7% decline for rest of India), assuming that the protests would subside by February 2021,”