NHAI’s FASTag Annual Pass May Cut Toll Revenues by 4-8%: CRISIL

NHAI’s FASTag annual pass may reduce toll revenues by 4-8%, says CRISIL

The recently announced FASTag annual pass for private vehicles is expected to reduce toll revenues by 4-8%, according to an analysis by CRISIL Ratings. The assessment, based on 40 operational toll road projects, outlines both the revenue implications and expected industry response to the new pricing initiative, which takes effect on August 15, 2025.

The National Highways Authority of India (NHAI) introduced the Rs. 3000 annual pass to make highway travel more affordable for private vehicles, including cars, vans, etc. The pass allows for 200 trips or one year of usage on national highways and expressways, whichever is exhausted first. For frequent users, this translates to nearly 80% savings per trip, compared to current toll rates of Rs 70-80.

CRISIL’s evaluation suggests that while private vehicles constitute 35-40% of highway traffic, their share of total toll revenues stands at a lower 25-30%. If approximately one-third of these private vehicle owners purchase the annual pass, toll operators are projected to see a revenue dip in the range of 4-8%.

Anand Kulkarni, Director at CRISIL Ratings, emphasised the need for timely finalisation of a compensation mechanism to offset revenue losses for operators. He highlighted that a clear, swift compensation process will help maintain private sector confidence, which is critical for ongoing infrastructure investment.

The transition to the new system will require toll operators to collect compensation from NHAI rather than through direct, real-time toll payments from users. CRISIL pointed out that while delays in establishing compensation processes are possible, the established payment history of NHAI under other models such as build-operate-transfer (BOT) annuity and hybrid annuity projects should mitigate concerns over payment delays.

Despite the expected revenue dip, CRISIL believes that toll road operators’ credit risk profiles will remain stable. The agency noted that most rated projects have sufficient liquidity to absorb short-term mismatches, even if there is a six-month delay in receiving the first round of compensation from NHAI.

Saina S Kathawala, Associate Director at CRISIL Ratings, stated that debt service coverage ratios (DSCRs) are expected to be minimally affected this fiscal year due to existing cash buffers. Once compensation mechanisms are operational, DSCR levels should normalise.

The new annual pass is expected to provide significant benefits for frequent commuters but could temporarily disrupt toll operator revenues, particularly if adoption rates exceed projections. CRISIL recommended close monitoring of adoption trends to manage potential financial impacts during the transition phase.