Number of high risk PPP highway projects fall: Crisil Ratings

NEW DELHI: The proportion of under-construction, high-risk highway projects has reduced significantly from 53% two years back to 21% now after a slew of steps were initiated by NHAI, a CRISIL Ratings report has said.

The report said that measures taken by NHAI such as significantly shorter timelines for right-of-way and approvals, loan support from NHAI for languishing projects, termination of stuck projects and their subsequent re-awarding, and affording a change in sponsor have led to decrease in the number of high risk projects.

Today, only 2,000 km of the 9,400 km of highway projects under construction awarded by the NHAI on a build operate-transfer (BOT) basis, are at high risk. In the operational BOT portfolio, too, approvals for change in sponsor and subsequent refinancing, along with traffic growth, have yielded results.

“About 80% of the operational portfolio comprising nearly 100 BOT projects are at low risk today in terms of debt servicing,” said Sachin Gupta, Senior Director, CRISIL Ratings. “These projects have strong sponsors that can manage cash flow mismatches.”

Apart from reduced risk, policy measures by the NHAI also resulted in a doubling of highway construction from 12 km per day in fiscal 2015 to 23 km in fiscal 2017. The pace is expected to quicken to ~40 km per day in the near-term. The awarding of contracts, led by the hybrid annuity (HAM) and toll-operate-transfer (TOT) models, is expected to sustain given the announcement and subsequent implementation of the Bharatmala project.