The continued unrest by farmers in Punjab and Haryana has resulted in the suspension of tolls in 24 road projects, resulting in a loss of daily income of around Rs 4.8 crore. A total loss of income is set at 1,060 crore rupees until July 31, 2021, according to the rating agency CARE Ratings.
Thirteen national build-operate-transfer (BOT) highway projects and eleven state BOT highway projects were affected by the unrest.
The rating agency said in a statement that the disruption in toll collection for state projects since October 2020 has escalated with no collection of fees at toll stations since December 2020.
India’s National Highways Authority (NHAI) issued a circular in July recognizing the farmer unrest as an indirect political event of force majeure. He reiterated the clauses of the concession contract allowing the extension of the concession period and reimbursement up to fifty percent of the actual cost (M&M and interest) beyond the insurance.
CARE Rating said it is planning for troubled national highways BOT projects opting for concession termination due to persistent force majeure (FM) as the event has passed 180 days. This will likely include projects worth Rs 4,800 crore opting for termination.
Force majeure remedies at major state road concessions are similar to those of NHAI. But for the Punjab Infrastructure Development Board, clarity is still expected.
NHAI’s estimated compensation for thirteen BOT toll projects will be around Rs 1.60 crore per day, covering around 37% of the lost revenue. Nine of the thirteen NHAI BOT projects in Punjab and Haryana faced liquidity constraints even before the FM event due to significant underperformance in toll collection.
The extent of NHAI’s ratings of counterclaims, including deferred premium obligations, will influence the decision making of the developers of these projects.
CARE Ratings has rating coverage for thirteen BOT NHAI and National Roads projects in Punjab and Haryana with
rated debt of Rs 2,242 crore. Of this amount, a debt of Rs 2,038 crore is classified in default due to continued underperformance.
In addition, the Rs 100 crore debt ratings have been revised from “BBB + / Stable” to “BBB / Credit Watch with negative implications due to the uncertainty surrounding the resumption of tolls. parents’ record, he added.