Detrimental impact of Covid-2019 on economy to affect transport Infra: Icra
According to the ratings agency, transportation infrastructure has a strong correlation with the health of the economy and thereby with the movement in GDP.
"Therefore, the detrimental impact of Covid-2019 on the overall economy would in turn affect the movement of freight on the road stretches and the air traffic," Icra said in a statement.
It said the GDP growth is estimated at 2 per cent for FY21 and added that as far as toll road projects are concerned, the assumption is that entire April, 2020 will be under toll suspension with gradual ramp up over a three month period between May and July, 2020.
Subsequently, the traffic growth rates are aligned to rating agency's quarterly growth estimates of GDP, it said, adding that revision in toll rates in alignment with WPI rates is expected to be in the range of 1-4 per cent based on the applicable toll rate revision formulas, which will also aid toll revenues in FY2021.
About toll road projects, Rajeshwar Burla, Vice President, Corporate Ratings, Icra said, "Another assumption that was made while drawing toll collection estimates is that NHAI would compensate O&M and interest costs by June, 2020 for the entire lockdown period. After factoring in this compensation, the toll collections for FY2021 are estimated to decline in the range of 6.5 per cent to 8 per cent in FY2021".
On the air traffic movement, even prior to COVID, the growth in air craft movement as well as passenger traffic had slowed down considerably during nine months of FY2020, it said.
This was driven by increase in fares due to lower number of flights owing to grounding of Jet airways followed by overall sluggishness in demand for travel amid weak business sentiments, it added.
"Overall, adjusted for the closure of airport operations (excluding cargo), the passenger traffic witnessed de-growth in the range of 3-5 per cent for FY2020. ICRA rates four major private airports – Bangalore, Cochin, Delhi and Hyderabad which together account for around 40 per cent of total air passenger traffic in the country," the statement said.
On the performance of airport operators, Burla added, "The impact on airport operators can be viewed in two parts. One, majority of the revenue loss gets trued-up and hence the impact is short-term in nature. ICRA rated airport operators have robust on-balance sheet liquidity which helps them tide over short term cashflow mismatches. Two, the portion of revenues which does not get trued up (70 per cent of non-aero revenues) has to be borne by the operator which would impact their return on capital employed. From the debt serviceability point of view, no issues are being envisaged".
On the metro projects, ICRA said that revenues are directly linked to the ridership which is likely to remain under pressure even post lockdown as social distancing norms are likely to continue which discourages usage of mass transit systems. NAM BAL