Demonetisation pinch: Road companies await toll refund from govt

L&T, Gammon & others were promised reimbursement of toll lost during note ban

Most road companies are still awaiting full compensation for the revenue lost and cost incurred over the 23-day toll payment exemption after the Union government decided on demonetisation.

It was November 8 when the government said it was disallowing all Rs 500 and Rs 1,000 notes. There was chaos at highway toll booths and the government decided to exempt payments, for another 23 days.

Six months since, the companies say they are still awaiting full compensation for the toll they forwent. “The average toll collection per day is Rs 51.59 crore from the fee plazas under National Highways Authority of India, which did not accrue to the government with effect from November 9,” the roads ministry informed the Lok Sabha in February.

For 23 days, the toll forgone would be Rs 1,187 crore. “We have received Rs 36 crore as compensation so far,” said Shankar Raman, chief financial officer for Larsen & Toubro, of the Rs 100-crore due. The ministry had decided to compensate road companies for both operations and maintenance, through a combination of cash compensation and extension of concession period, to make up for the revenue loss. 

“The government is in the process of compensating developers/concessionaires of BOT (Toll) and OMT projects for the revenue loss from forgone toll collections during the period,” the ministry had informed the Lok Sabha in February. 

IL&FS Transportation Networks (ITNL) and Gammon Infrastructure Projects are also waiting. “ITNL is to receive Rs 30- 34 crore and has filed the required documents,” said a person in the know.

IRB Infrastructure Developers said it had got a substantial part of the cash compensation expected. “We are waiting for the extension of the concession period of the contracts,” said Virendra Mhaiskar, chairman. 

Some say the companies and the government officials concerned are not on the same page regarding the compensation by extending the concession. 

“At present, issues over the compensation will not lead to incremental liquidity pressure, as companies have already sailed through that time period. However, delay or lack of compensation will impact the overall profitability of these projects slightly. A larger issue could be the wrong signal sent across to investors for the road sector, related to uncertainty over promised payments,” says Shubham Jain, vice-president at ratings agency ICRA.

Bottleneck
 

• Road ministry had pegged the toll loss per day at around Rs 60 crore per day
• Govt promised to compensate revenue loss of toll projects
• L&T, Gammon Infra, ITNL among those yet to receive full compensation
• Some say the firms and govt officials concerned are not on the same page regarding compensation by extending the concession