CRISIL: FASTag Annual Pass Could Reduce Toll Operator Revenues by Up to 8%

To address concerns regarding delays at toll plazas, the National Highway Authority (NHAI) has proposed a Rs 3,000 FASTag annual pass for private vehicles. However, a recent CRISIL report suggests this initiative could negatively impact toll road operator revenues. The report, based on an analysis of 40 operational toll road projects, projects a 4-8% reduction in revenue. This assessment considers the impact of the new pricing structure, effective August 15, 2025. The annual pass applies to private vehicles making over 200 trips or with one-year access on national highways and national expressways. Drivers currently pay around Rs 70-80 per trip, potentially saving up to 80% or Rs 55-65 per trip with the annual pass, when used for the maximum number of trips. The new compensation process requires stakeholder consultations to finalize implementation details, which could potentially delay reimbursements to operators. CRISIL expects the credit risk profiles of rated toll operators to remain stable during this transition. The major challenge lies in the shift from direct payment collection to toll operators seeking compensation from NHAI. Furthermore, CRISIL warns that a higher-than-expected adoption rate of the pass could result in substantial interim revenue losses, warranting careful monitoring. The CRISIL assessment evaluated the debt coverage service ratios and liquidity of the toll road projects. It found that operators have adequate cash flow coverage to navigate the transition. As Anand Kulkarni, Director, CRISIL Ratings, noted, private vehicles account for 35-40% of overall traffic volume but contribute only 25-30% to revenue. The impact of a potential revenue reduction of 4-8% underscores the importance of timely implementation of the compensation mechanism.