New Delhi: The National Highways Authority of India (NHAI) on Thursday signed its first toll-operate-transfer (ToT) agreement with Sydney-based Macquarie Group. Under the agreement, the latter will make an upfront payment of Rs9,681.5 crore within 120 days of the signing the contract to execute the project.

NHAI member finance Rohit Singh confirmed the development. “The signing of 9 concession agreements for the nine highways comprising the ToT bundle reaffirms the faith of international investors in the way they value India’s infrastructure assets. It’s a new beginning that is bound to spread across sectors providing much needed capital to meet our infrastructure development," he said.

The Macquarie -NHAI deal is one of the largest foreign investments in India’s public infrastructure and will entitle the group to manage 648 km of national highways. These national highways are across the states of Andhra Pradesh and Gujarat. According to the bid document, the concession period of 30 years could be reduced by more than five years or increased by more than 10 years on mutual consent of both the concessionaire and NHAI.

This is India’s first foray into asset recycling and will form the template for other sectors such as power, telecom, oil and gas to unlock their capital base for financing. Under this model aimed at monetizing India’s publicly funded highways to finance the ambitious Bharatmala project, the right to collect toll on selected national highway stretches is to be assigned for a 30-year period to investors against an upfront payment of a lumpsum amount to the government.

The cabinet committee on economic affairs in 2016 authorized NHAI to monetize 75 public-funded national highways with a road length of around 4,500 km, which together can fetch around Rs1 trillion. The TOT model will help NHAI raise upfront capital to fund road projects based on the engineering, procurement and construction and hybrid-annuity models.

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