Nine toll road projects, awarded by the Gujarat government under PPP scheme, will be affected by the implementation of a toll exemption policy for passenger, vehicles and state transport buses. 

The new regulation, implemented on August 15, rules out cars, jeeps, vans and state transport buses from toll on state highways. The Government of Gujarat plans to compensate the income loss by a monthly payment from the referred exempted vehicles.

The road PPP projects affected by the new policy are namely: Bhuj-Nakhatrana, Kim-Mandvi Road, Deesa-Panthavada-Gundari Road, Ahemadabad-Mehsana, Vadodara-Halol, Himatnagar Bypass, Rajkot-Vadinar section, Ahmedabad-Viramgam Maliya, and Halol-Godhara-Shamalaji.

According to sources, Shubham Jain, Vice-President of rating agency Icra, said: 

“The actual traffic on a majority of these stretches is at around 60-65 per cent of that of initial estimates. Projects for which there is a revenue share payable to the Gujarat State Road Development Corp Ltd, have already sought deferment due to weak toll collections. 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.”

The Government of Gujarat has stated that in case of an unreasonable rise in the traffic on affected toll roads, it will revise the new policy involving exempted vehicles. 

The Government said:

“For eight of the nine projects, the total revenue for FY16 is estimated to be Rs 5.01 billion. Assuming a growth of 6 per cent in toll collections every year, the total revenues during the concession period for these projects is estimated to be Rs 137.47 billion. Therefore, the total burden on the Government of Gujarat is estimated to be in the range of Rs 30.24-34.36 billion.”

Of the nine projects, three were promoted by Larsen & Toubro, two by IL&FS Transportation Networks Limited (ITNL), two by Welspun Enterprises and one each by Ranjit Buildcon Limited and MS Khurana Engineering Limited.

In late May, we reported that IL&FS Transportation Networks Limited (ITNL) signed a definitive agreement with Macquarie’s Asian infra fund (MAIF) for the sale of a 15% stake in Gujarat Road and Infrastructure Company Limited (GRICL).

GRICL was promoted by ITNL (41.80%), MAIF (41.80%) and Government of Gujarat (16.39%) for strengthening and four-laning of 31.7 km long Vadodara-Halol and 51.6 km long Ahmedabad-Mehsana stretches. These were the first set of state road highway projects developed in the country on build, own, operate and transfer (BOOT) model.