Gujarat’s decision to exempt vehicles from toll on State highways last week may impact nine public private partnership (PPP) toll road projects in the State, rating agency ICRA said here on Monday.
“Toll exemption for private vehicles and State transport buses will be an additional burden on the cash flow and would affect the debt-servicing capability further,” ICRA vice-president Shubham Jain said.
The State government exempted car, jeep and van category vehicles along with State transport buses from toll on State highways beginning August 15. The government plans to compensate the revenue loss incurred from such toll exemption through monthly reimbursements for such exempted vehicles.
“Toll exemption is likely to result in disputes as the quantum of compensation in such cases is always not agreeable to all parties as seen in Maharashtra. At a time when the participation from the private sector is already low and lenders are cautious towards lending for new infrastructure projects, this move could further dent the confidence of both private participants and lenders,” Mr. Jain said.
Last year, the Maharashtra government had scrapped 12 toll plazas across the State and exempted toll tax for small vehicles and State transport buses at 53 other toll plazas. ICRA said the total burden of the latest move by the Gujarat government was likely to be Rs. 30.24 billion to Rs.34.26 billion this financial year.
Of the nine road projects in Gujarat, three are promoted by L&T, two by IL&FS Transportation Networks Limited (ITNL), two by Welspun Enterprises and one each by Ranjit Buildcon Limited and M.S. Khurana Engineering Limited.