Toll Collections on Recovery Path; Reach 85% of Pre-Covid-19 Level in July: ICRA

Toll collections on highways are on the road to recovery, reaching 85 per cent of the pre-COVID-19 levels in July and if the trend continues the reduction in collections could be below 10 per cent in 2020-21, rating agency ICRA said on Monday.

It said there were encouraging trends in traffic in July and about 85 per cent of ICRA rated toll road projects have debt service reserve greater than or equal to one quarter of debt obligation and are resilient enough to absorb the COVID-19 induced revenue shock.

“Overall, the traffic in 4M FY2021 has rebounded quite well, which is encouraging. This is also corroborated by the e-way bills generated. This pace of recovery, if sustained, the overall reduction in toll collections for national highway projects could be less than 10% in FY2021,” ICRA said in a statement.

Post the resumption of tolling on national highways from April 20, the movement of commercial vehicles picked up at significant pace over the last three months and reached near 90 per cent of the pre-COVID-19 levels.

However, the movement in passenger vehicles is yet to recover fully, it said. The unabated rise in coronavirus infections in the unlock phase, localised reimposition of lockdowns in several states, and heavy monsoons in many parts of the country had interrupted this recovery in the first fortnight of July, the rating agency said adding that nevertheless, toll collections reached 87 per cent of the pre-COVID-19 levels in the second fortnight of the month.

“Majority of the national highway stretches being arterial routes have 70-75 per cent of toll collections from commercial vehicles; passenger vehicles account for less than a quarter of toll collections. While 90 per cent of commercial vehicles are back on roads, the passenger vehicle movement is less than 60 per cent of pre-COVID-19 levels,” Rajeshwar Burla, Vice President, Corporate Ratings, ICRA said.

The rating agency said the sample considered for the analysis is spread across 11 states with Tamil Nadu, Rajasthan, Maharashtra and Telangana accounting for 63 per cent of the total sample. The localised lockdowns imposed in Tamil Nadu and Maharashtra adversely affected the toll collections for the stretches located in these states in July (reported 65-75 per cent of pre-COVID-19 levels).

Excluding these stretches, the other entities in the sample reported around 90 per cent of pre-COVID-19 collections in July.

“Around 85 per cent of ICRA rated toll road projects (excluding default category credits) have debt service reserve (liquidity buffer) greater than or equal to one quarter of debt obligation (includes principal and interest) and are resilient enough to absorb the COVID-19 induced revenue shock,” Burla added.

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