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COVID-19 effects: Extension of concession period for toll road operators not likely to supply adequate relief, suggests ICRA



Mumbai: The Countrywide Highways Authority of India’s (NHAI)choice to increase concession period for toll road operators to compensate for toll revenue loss in the course of the lockdown is unlikely to present enough aid to the concessionaires, ICRA reported on Monday.
The Ministry of Street Transportation and Highways (MORTH) experienced suspended tolling on all countrywide highways for a 25-day period concerning 26 March 2020 to 19 April 2020.
In accordance to the rating agency, the extension of concession time period by 3-6 months will not compensate for the loss incurred by concessionaires, who have a more time balance concession period of time (far more than 5 many years), during the interval of lockdown.
The agency pointed out that entities which endured a utmost of 18 % revenue loss and have a balance concession period of up to 5 yrs are the only ones which are better off with the extension in concession time period as they are protected in net present value terms.
“Nevertheless, the relief will not be practical for individuals possessing greater losses (much more than 18 per cent), even with possessing a balance concession period of time of up to 5 several years. Also, individuals possessing a balance concession time period of 15-20 years, this extension of 3-6 months will deliver no aid,” it reported.
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Write-up-resumption of tolling, toll collections reached 30-35 % of pre-COVID-19 stages in previous 7 days of April 2020, which subsequently enhanced to 50-55 p.c in May well 2020, it added.
“On an yearly basis, for assignments witnessing up to 25 p.c loss in revenue, the extension in concession interval would be 90 times and for initiatives witnessing a lot more than 50 % dip in toll collections the raise in concession period is capped at 180 days,” ICRA explained.
Rajeshwar Burla, Vice President, Company Ratings, ICRA mentioned, “In net present value phrases, the reduction measure does not adequately compensate for the losses incurred by the greater part of the operational BOT (establish, operate, transfer) toll highway jobs.
“This kind of departure from the concession arrangement could have been avoided as it may perhaps have ramifications on attracting investments in TOT (toll, work, transfer) and NHAI’s InvIT,” Burla mentioned.
Aside from extension of the concession period of time, NHAI’s reduction package also includes offering financial loans to concessionaires who have not availed or have not been granted moratorium underneath RBI pointers.
Many BOT concessionaires have already opted for loan moratorium on their undertaking debt, as a result, in these kinds of scenarios, the quantum of COVID-19 loan eligibility is not substantial.
On the other hand, for the entities that have not opted for loan moratorium earlier, the COVID-19 personal loan is a good from a liquidity point of watch, the agency observed.
“Nevertheless, this technique may possibly stop up turning into contentious with concessionaires disputing the proposed aid measures.
“Also, these measures discriminate in between concessionaires as entities that have not opted for personal loan moratorium previously are better off – they would now have entry to COVID-19 personal loan from NHAI at a a great deal more cost-effective rate of bank rate furthermore 200 basis points with versatile repayment phrases,” Burla additional.

Updated Date: Jun 01, 2020 20:33:48 IST

Tags :

BOT,

BOT Concessionaires,

Concessionaires,

Coroanvirus,

Coronavirus Outbreak,

COVID-19,

Elief Measures,

Liquidity,

Financial loan Moratorium,

Lockdown,

NewsTracker,

NHAI,

NHAI Aid Offer,

RBI,

RBI Rules,

Repayment Conditions,

Revenue Loss,

Toll Road Operators

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