"Therefore, in terms of both award and execution, the NHAI is expected to miss the target by a wide margin," the ratings agency said.
The Ministry of Road Transport and Highways (MoRTH) planned to increase both the awards and the execution in FY17 by 2.5 times from that of the FY16 levels. For NHAI, thetargets are steep with a target execution of 8,000 km (21.92 km/day) and target awards at 15,000 km. Given that the execution during FY16 was at around 5.44 km/day, the target for FY17 at 21.92km/day is almost four times higher, Icra noted in its analysis.
In August 2016, the Cabinet Committee on Economic Affairs (CCEA) had authorised the NHAI to monetise public funded National Highway projects which are operational and generating toll revenues for at least two years after the Commercial Operations Date through the Toll-Operate-Transfer (TOT) model. Seventy-five operational national highway projects totalling 4,376 km completed under public funding have been preliminarily identified for potential monetisation, using the TOT model.
For these 75 projects, the median vintage in terms of toll collection track record stood at 5.22 years. Out of these, nearly 26 projects (35 per cent of total) are on BOT (Annuity) basis and the remaining 65 per cent have been implemented on engineering, procurement and construction (EPC) basis. Of the portfolio, 25 projects (33 per cent) are part of the Golden Quadrilateral (GQ) with high traffic density, where the average toll collection per day is at Rs. 1.6 million, whereas for the non-GQ stretches it is Rs 0.7 million per day.
According to K Ravichandran, Senior Vice President and Head, Corporate Ratings at Icra: "Given the wide variation in toll collections, the attractiveness of certain stretches with long vintage and established traffic volumes - especially the ones along the GQ - is much more when compared to the ones with less operational track record and weak toll collections.
"In this context, it makes sense to bundle the projects so that weaker projects are not left out and NHAI could also consider keeping floor and cap so that the bidding is not very aggressive in case of attractive stretches".
According to ICRA Research's estimates, the total value of 75 projects proposed to be awarded through the TOT is estimated at Rs 356 billion. Assuming the average cost to the NHAI is Rs 0.13 billion per km (for a four-lane project), the proceeds from monetisation through the TOT route can be used towards road construction of around 2,700 km, it added.
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