Maha move may take a toll on road revenues, feel developers

By: | Published: April 21, 2015 12:51 AM

The Maharshtra government’s decision to exempt cars and state transport buses from paying toll from June 1 has not gone down well...

The Maharshtra government’s decision to exempt cars and state transport buses from paying toll from June 1 has not gone down well with road developers. They say though the move may have a limited impact now, it will hit investor sentiment in a long run.

To fulfill the election promise, chief minister Devendra Fadnavis had announced the closure of 12 toll plazas in the state last week. The government exempted toll payment by light motor vehicles and state transport corporation buses at 53 toll plazas. The state government’s move has made the road developers jittery over the future of toll roads.

“The Maharashtra government is going back on the terms of the concession agreement. It will make BOT players wary of bidding for road projects in the future,” said Varun Mehta, deputy general manager (finance), Sadbhav Engineering.

Virendra Mhaiskar, the chairman and managing director at IRB Infrastructure Developers, said, “We are yet to get a clarity on how the government plans to compensate for the loss of revenues.”


There has been no official calculation of the amount the state government may have to shell out to compensate the road developers.

Report, however, suggests it could be in the range of R7,000 crore to 9,000 crore. Developers say it should be the net present value of the balance revenues on the project.

IRB’s three road assets will likely suffer with the government’s decision, but the impact on revenue could be minimal, said Mhaiskar. “These projects contribute about 3% to the overall toll collection by the company,” he said.

As part of the closure of 12 toll plazas, two IRB projects — Nagar-Karmala-Tembhurni and Mohol-Mandrup-Kamtee — face closure, which contribute about 2% to the company’s overall toll revenues. The concession on these projects will end in a few months, Mhaiskar said. Toll from cars contribute 1.5% to the total collection on the company’s Thane-Ghodbunder road project, which could be affected by the state government’s decision. The company still has five years of concession period left on this project.

Sadbhav Engineering’s Aurangabad-Jalna project could bear the brunt of the government’s move to the extent of R6 crore per annum, said Mehta. The annual toll collection on the project is Rs 36 crore, with 16 years of concession still remaining.

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