It’s been just over 10 days since concessionaires have resumed collecting toll on national highways. The government had waived all toll payments after it announced the demonetisation decision. And though they are back in business, the operators are now in a fix as the government is yet to clarify on the compensation formula for the shortfall in collection, either in terms of cash reimbursement or an extension in the toll collection period.
Concessionaires, who had been asked not to collect toll, would be reimbursed up to 75 percent of the total loss in collection due to demonetisation, Raghav Chandra, the chairman of National Highways Authority of India said on November 15. Chandra’s term as head of the highway authority ended on November 23.
“We will compensate the concessionaires by making interim payments to them, up to 75 percent so as to ease their cash flows,” Chandra had said.
But, now the government may just choose to extend the tenure of collection, instead of making an upfront payment, and the companies are not too happy about it.
We don’t know whether there will be an actual reimbursement or whether there will be an extension of the concession period. One has to wait and watch, but we are not going to accept this because basically we are fighting for complete revenue loss reimbursement. Honestly, cash in hand is better than an extension.”
Isaac George, Director and CFO, GVK Power and Infrastructure Ltd.
Similarly, MEP Infrastructure Developers Ltd., which operates 25 toll plazas across seven states, including all five entry points into Mumbai, has also approached the authorities – NHAI and Maharashtra State Road Development Corporation – to be compensated for the loss incurred.
“We have already approached the authorities for around Rs 100-120 crore loss that we have incurred on toll plazas across Mumbai and various national highways,” said Jayant Mhaiskar, vice chairman and managing director, of the company on an analyst conference call.
Demonetisation led to a loss of Rs 70-80 crore across various national highways, and Rs 35-40 crore from the five entry points into Mumbai and the Bandra-Worli Sea Link, which the company operates, Mhaiskar added.
The toll concessionaires fear that if the authorities decide to extend the toll period instead of paying them, the losses will leave a big dent in their third quarter earnings.
“Demonetisation would have an impact on revenue in Q3 due to the pause in toll collections across the plazas,” Mhaiskar said.
GVK’s Isaac shared the concern.
Certainly. It would have an impact (on Q3 numbers). See, if they are not going to reimburse me the loss of revenue in totality, then there will be an impact on my profitability and revenue.”
Isaac George, Director and CFO, GVK Power and Infrastructure
GVK, which operates the Jaipur-Kishangarh expressway and Deoli-Kota expressway in Rajasthan, has asked the NHAI to reimburse the operations and maintenance expenses and interest rate loss, incurred over the 25 days when they had been barred from collecting toll.
Hindustan Construction Company Ltd. which has recently started collecting toll on the Farakka-Raiganj highway in West Bengal, however, seems to have some clarity.
“We have received a circular where they (NHAI) have agreed that whatever time period is lost because of not tolling would be compensated by giving an additional time post completion of concession period,” said Praveen Sood, Group CFO of HCC in an interview to BloombergQuint.
The Pain Continues
Vehicular traffic is yet to pick up said MEP Infrastructure’s Mhaiskar, with at least 12 percent fewer commercial vehicles crossing toll plazas in December, thus denting daily collections.
Passenger vehicles traffic has not fallen as much, Mhaiskar added
Wait And Watch
MSRDC accepted that the companies have approached the authority for loss of revenue. The claims, however, are yet to be submitted officially to the respective offices, said Kiran Kurundkar, the joint managing director of MSRDC.
The claims from Mep Infra have not yet been submitted. I still have to see such claims. But the company has informed us that they have suffered losses because of demonetisation.
Kiran Kurundkar, Joint Managing Director, MSRDC
Once the claims are submitted, MSRDC will do its own background check wherein the historic traffic data will be analysed and an average collection per day will be calculated. Based on the assessment, MSRDC will figure out the loss incurred by the company on a daily basis and forward it to the state government for approval.
See there is a process. I can’t just process the claims that the company sends me. I have to also get it approved from the state government as they have worked with the central government in tandem to stop toll collection post demonetisation
Kiran Kurundkar, Joint Managing Director, MSRDC
Highway operators are resigned to waiting for the central and state governments to get their act together. “We will have to wait patiently and see what NHAI does. We can’t be pushing them. Even if we do, nothing will happen. They will take their own time deciding when to start reimbursements” Isaac said. Yangervis Solarte Womens Jersey