Annual toll pass on NHs could could dent toll revenue by up to 8%, says Rating agencies

The roll-out of Rs 3000 annual toll pass for private vehicles from August 15 could hit toll revenue by up to 8% though toll users could see savings of up to 80%, said two rating agencies suggesting the government should work out a reimbursement mechanism to compensate the toll operators for the revenue loss.

“We estimate 7-8% impact in toll revenue for the sample project length of 5000 km considering 20% contribution of cars in toll revenue with an assumption of 50% private passenger vehicle and 75% user adoption rate,” CareEdge Ratings said on Wednesday.

“This event is likely to be considered as a change in law for release of suitable compensation to toll operators,” it said, suggesting a potential annual compensation to range between Rs 3,000-5,000 crore which can be met through income from toll passes.

According to CrisiL Ratings, assuming a third of private vehicles purchase the annual pass, revenue of toll operators will be impacted by 4-8%.

“This may need to be compensated for,” it said, adding timely finalisation of the compensation mechanism and swift implementation will reinforce the confidence of the private sector which plays a key role in funding the growth of the sector.

Both CareEdge Ratings and Crisil Ratings, however, see close to 80% saving for frequent toll users through the annual pass.

“The Rs 3000 annual toll pass for private vehicles could reduce effective toll rates for non-commercial car users by 80% from Rs 1.60 per km to just Rs 0.30 per km, marking a major affordability shift for frequent national highway users,” CareEdge Ratings said.

As per the Crisil Ratings assessment of 40 operational toll road projects, the annual pass, if used for 200 trips, will effectively translate into savings of up to 80% or Rs 55-65 per trip.

“Net-net, the annual pass will benefit users and the medium-term impact on toll road operators will be modest,” Crisil Rating said, adding more than expected adoption of the annual pass may lead to higher revenue loss in the interim and will bear watching.

The ministry of road transport and highways recently announced an annual toll pass of Rs 3000 or 200 trips in a year, to be available from August 15, for private vehicle owners using national highways.