Breaking News, Latest News, World News, India News, Cricket, Videos & Photos

Rising WPI inflation to accelerate higher road toll collections in FY23: ICRA

a33b62264d65de4814715e6277767d34

New Delhi, Jan 11 (IANS) Rising wholesale price index-inflation will lead to an increase in toll rates during FY23, benefiting road projects with higher collections, ICRA Ratings said on Tuesday.

At present, toll rates and traffic volumes are the two variables which determines collections.

Toll rate increase is linked to the WPI while the traffic volume is linked to underlying economic activity, primarily manufacturing, construction, and mining.

On technical basis, for projects bid post 2008, toll rate is revised annually in April at 3 per cent fixed rate plus 40 per cent of the change in WPI for December.

A hike in toll rates for the projects bid prior to 2008 is 100 per cent linked to the March WPI, toll rate revision happens in July or September each year.

“The WPI for December 2021 is expected to be around 13 per cent (as against 2 per cent in December 2020) translating into toll rate increase of 8.2 per cent during FY2023 for the projects which are linked to 3 per cent fixed rate plus 40 per cent of the change in WPI,” said Vinay Kumar G., Sector Head, Corporate Ratings, ICRA.

“For projects awarded prior to 2008, ICRA expects March WPI to be around 9.3 per cent.”

In both the cases, the agency expects a decadal high toll rate revision to result in 14-15 per cent growth in toll collections for FY2023 on the back of 5-6 per cent traffic growth.A

“The healthy growth in toll collections far outweigh the increase in maintenance costs resulting in a good improvement in cumulative ‘DSCR’ numbers for ‘BOT’ toll road assets which otherwise got moderated to an extent due to Covid impact,” Kumar said.

“This is factoring in the assumption that impact of future Covid waves (if any) to be low.”

–IANS

rv/vd

Comments are closed.

This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Accept

Privacy & Cookies Policy