Drastic reduction in traffic through toll plazas pushes NHAI to shoot off letter to road transport and highways ministry; toll collections through FASTags dropped by 50 percent in the past week.
The National Highway Authority of India (NHAI) has asked the road transport and highways ministry whether it should continue with collecting toll after a sharp drop in traffic triggered by the outbreak of the coronavirus, people familiar with the matter told Moneycontrol.
“It is requested that suitable directions may be given whether tolling operations should be continued or it should be suspended till further orders,” the NHAI said in a letter it sent to the ministry on March 25, 2020.
Since the nationwide spread of the pandemic and subsequent instructions from the government to go for a lockdown, the movement along national highways has been chiefly limited to the transport of essential goods and services, said one of the persons. The drastic reduction in traffic through toll plazas has prompted NHAI to send the letter, which Moneycontrol reviewed.
A suspension of toll collections could hurt InvITs (Infrastructure Investment Trusts) backed by infrastructure giant L&T, IRB Infra and Oriental Structural Engineers and listed players such as PNC Infratech, Ashoka Buildcon and Sadbhav Engineering.
According to NHAI data, toll collections through the electronic payment system FASTags, which account for 70 percent of the total collections, dropped by 50 percent in the past week. The total number of toll transactions also reduced by more than half.
National Highways are the arterial roads of India that connect state capitals, ports and rail junctions. The highways are often described as the economic backbone of India, accounting for nearly half the total passenger and freight traffic.
As of March 01, 2019, the total length of National Highways in India stood at 132,499 kms.
In the letter to the ministry, NHAI highlighted the challenges faced by toll operating agencies which expressed their inability in continuing with tolling operations due to multiple factors linked to the ongoing impasse in the domestic transport system. Fear of spread of the virus, “financial viability” (contract remittances being higher than actual toll fees during the lean period) and inability of new toll operation agencies to sign contract agreements were the factors mentioned in the NHAI letter, added a second persons.
All the people Moneycontrol spoke to requested anonymity.
“The government will have to come out with a compensation scheme for toll developers who will incur losses on account of the 21-day lockdown which has been imposed across the country. A similar compensation was also allowed at the time of demonetisation,” said Kuljit Singh, Partner, (Infrastructure Investment Banking), EY.On March 22, the government interstate public transport and discontinued all passenger train services until March 31 to prevent the spread of the virus in India. On March 24, it went for a complete lockdown, shuttering every establishment except essential services such as pharmacies and grocery stores.
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