Compensation framework under concession agreements will be crucial for maintaining operator credit profiles.
25 Jun 2025 | 485 Views | By Shruti Shiraguppi
The National Highways Authority of India's announcement of a Rs 3,000 FASTag annual pass for private vehicles will reduce toll road operators' revenues by 4-8%, according to a Crisil Ratings assessment released on June 25, 2025. The rating agency analyzed 40 operational toll road projects to evaluate the impact of ...
This is an Autocar Pro Plus article. Subscribe to continue reading.
The National Highways Authority of India's announcement of a Rs 3,000 FASTag annual pass for private vehicles will reduce toll road operators' revenues by 4-8%, according to a Crisil Ratings assessment released on June 25, 2025. The rating agency analyzed 40 operational toll road projects to evaluate the impact of the new pricing structure, which becomes effective August 15, 2025.
The annual pass applies to private vehicles including cars, vans and jeeps, covering up to 200 trips or one-year access from activation date on national highways and national expressways. Private vehicles currently pay Rs 70-80 per trip, making the annual pass equivalent to savings of approximately 80% or Rs 55-65 per trip when utilized for the maximum 200 trips.
"Private vehicles form 35-40% of the overall traffic plying on the stretches in our sample. In terms of revenue, the share is lower at 25-30%. Assuming a third of these vehicles purchase the annual pass, revenue of toll operators will be impacted by 4-8%. This may need to be compensated for. Timely finalisation of the compensation mechanism and swift implementation will reinforce the confidence of the private sector which plays a key role in funding the growth of the sector," said Anand Kulkarni, Director, Crisil Ratings.
The compensation process will require consultation with stakeholders and finalization of implementation modalities, potentially causing delays in reimbursement to operators. However, Crisil Ratings expects credit risk profiles of rated toll operators to remain stable during the transition period.
"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," said Saina S Kathawala, Associate Director, Crisil Ratings.
The new system will require toll operators to seek compensation from NHAI rather than collecting payments directly from users in real-time. The rating agency noted that NHAI's established payment track record with annuity projects, including build-operate-transfer annuity and hybrid annuity model projects, will mitigate counterparty risk concerns.
Crisil Ratings concluded that while the annual pass will benefit frequent travelers, the medium-term impact on toll road operators will be modest. The agency cautioned that higher-than-expected adoption rates could lead to greater interim revenue losses requiring monitoring.
The assessment covered debt service coverage ratios and liquidity positions of rated toll road projects, with operators maintaining adequate cash flow coverage to manage the transition period before compensation mechanisms are fully implemented.