Toll collection and remittances are likely to decline sharply amid ongoing lockdown due to coronavirus, a report said. The toll collection may fall by 13 per cent in FY21, assuming the lockdown remains till May 17, according to a CRISIL report.
“Toll collections and remittances from existing roads will fall a sharp 13% assuming there’s only a 57-day lockdown (from March 22 to May 17). That decline will be an even sharper 17% if the lockdown is extended by another two weeks”, it added.
The nationwide lockdown has restricted inter-and intra-state traffic. “Our base-case scenario (with lockdown ending on May 17) is traffic on existing stretches would de-grow 16.5% in fiscal 2021,” the report said.
After the lockdown was imposed in March, the National Highways Authority of India (NHAI), the nodal agency for the roads sector, had stopped toll collection till April 20. Even though collection has resumed, a sharp recovery in traffic after the lockdown is lifted seems unlikely, the report said, adding return to normalcy would be gradual.
Over the long term (fiscals 2019-2024), CRISIL expects toll collection to bounce back to a healthier annual growth rate of 11-12 per cent owing to new road construction. However, it’s still lower than the 14.6 per cent recorded in the last five fiscals.
“Without new road projects, growth in toll collections would be slower at ~6-6.5%. The increase in road traffic and toll collections would be supported by multiple factors such as a pick-up in sales of PVs and also CVs. Revival in the manufacturing sector and consumption of various commodities would push up fleet utilisation levels, and hence, CV sales. Toll revenue will also rise because of the strong execution pipeline, which would help increase tolling length,” it added.
In the longer term, roads are expected to remain the preferred mode of transportation for non-bulk goods, which would support freight traffic. “Plugging of leakages and lower exemptions in toll lanes because of the implementation of ETC would also bolster toll collections”, CRISIL report noted.
Source: Business Today