FASTag annual pass may cut toll road operators' revenues by 4-8%: Crisil

Crisil sees revenue loss of 4-8 per cent for toll road operators due to new FASTag annual pass scheme; compensation from NHAI will be key to limiting credit impact

The recent announcement of the FASTag annual pass of Rs 3,000 a year by the Indian government is set to impact the toll collections of private toll operators, bringing their revenues down by 4–8 per cent, according to Crisil.

 

The deficit may need to be compensated under the concession agreement, and hence, timely finalisation and implementation of the compensation framework will be crucial. A Crisil Ratings assessment of 40 operational toll road projects indicated the same.

 

The annual pass will be applicable from 15 August 2025 for private vehicles, i.e., cars, vans and jeeps. The pass will cover up to 200 trips or one year of access from the date of activation (whichever is earlier). At present, this pass will be applicable for national highways and national expressways. 

 

Based on Crisil’s assessment, a private vehicle typically pays Rs 70–80 per trip currently. Therefore, the annual pass, if used for 200 trips, will effectively translate into savings of up to approximately 80 per cent or Rs 55–65 per trip.

 

Anand Kulkarni, Director, Crisil Ratings, said, ‘Private vehicles form 35–40 per cent of the overall traffic plying on the stretches in our sample. In terms of revenue, the share is lower at 25–30 per cent. Assuming a third of these vehicles purchase the annual pass, revenue of toll operators will be impacted by 4–8 per cent. This may need to be compensated for.’

 

The compensation process will involve consultation with stakeholders and finalisation of modalities, which could lead to some delays, Crisil noted.

 

Saina Kathawala, Associate Director, Crisil Ratings, said, ‘Credit profiles of our rated toll road projects are expected to withstand potential timing mismatches between implementation of the annual pass and finalisation of the compensation mechanism. If there is a six-month lag in receipt of first compensation and a third of private vehicles opt for the annual pass, the DSCRs will have a minimal impact this fiscal. Additionally, adequate liquidity of at least one quarter will support credit risk profiles. Once the compensation mechanism is established, the DSCRs will return to their current levels.’ 

 

The shift to the annual pass would entail an additional process of getting compensation from the National Highways Authority of India (NHAI), the implementing agency, vis-à-vis the current process of real-time toll collection from users. The robust payment track record of NHAI, as seen in the case of annuity projects, will mitigate the counterparty risk, Crisil stated.

 

Net-net, the annual pass will benefit users, and the medium-term impact on toll road operators will be modest. Having said that, more than expected adoption of the annual pass may lead to higher revenue loss in the interim and will bear watching, the ratings firm added.

 

Additionally, some of India’s listed toll operators are IRB Infrastructure Developers, PNC Infratech, Ashoka Buildcon, MEP Infra, and some infrastructure investment trusts (InvITs) with toll road assets in their portfolio.