Del-Mum, Del-Kol roads toll collection may fall on DFCs getting operational:Icra

Toll collections on Delhi-Mumbai and Delhi-Kolkata highway corridors are likely to dip after eastern and western dedicated freight carriers (DFCs) get operational, shifting traffic to railways from road, rating agency Icra said on Monday.

This will impact Rs 6,565 crore of debt across five BOT (build, operate and transfer) road projects on toll.

"The completion of the eastern and western DFCs is expected to be game changers for the Indian transportation sector as it will lead to some modal shift in traffic from road to rail," it said in a statement.

As per an Icra analysis, the consequent adverse impact on the DelhiMumbai (NH-8) road corridor due to western dedicated freight carrier (WDFC) would be more severe than that of the impact of eastern dedicated freight carrier (EDFC) on DelhiKolkata (old NH-2) road corridor.

The DFCs which hold the potential to address many of the inefficiencies in rail network are expected to commence operations from financial year 2021-22, post several delays.

"NH-8 is likely to witness a one-time reduction in toll collections by around 11 per cent once the WDFC becomes operational owing to some modal shift in automobile, cement and container freight. For NH-2, the decline in toll collections is expected to be around 6 per cent once the EDFC becomes operational," the statement said.

Shubham Jain, SVP & Group Head, Corporate Ratings, ICRA said at present there are eight operational BOT (Toll) projects on NH-8. Of these, six will complete their concession periods during 2021-2023 and are expected to have minimal effect on account of modal shift to rail.

For the other two projects (with combined debt outstanding of Rs 2,057 crore), the concession period ends in 2026-27 and 2039-40 and are expected to witness the shift in traffic, Jain said.

Similarly, there are three BOT projects on the old NH-2 (with debt outstanding of Rs 4,508 crore) which are likely to be affected once the EDFC is operational.

"The decline in toll collections on account of this modal shift would adversely affect the loan life coverage ratios of these projects - thereby around Rs 6,565 crore of debt is estimated to be at risk, he said.

Icra said inadequate rail infrastructure capacity with poor connectivity had resulted in road being the dominant mode in the country even for low value, bulky goods which usually prefer rail over road.

The railways have also lost traction on account of a significant increase in freight charges (to support passenger segment) and decline in diesel prices, which has narrowed the pricing gap with the road segment.

In China and the US, modal share for road is relatively lower at 40 per cent and 30 per cent of total tonnekilometers, compared to 60 per cent in India, Icra added.