Govt looks to mop up $1 billion from auction of 11 highways next month2 min read . Updated: 19 Jul 2017, 04:47 AM IST
The winning bidders in the auction will maintain toll roads for 30 years in return fora feeand willalsomaintainthe highway stretches
Eleven operational stretches of public funded national highways are set to be auctioned off in August, allowing the winning bidders to maintain toll roads for 30 years in return for a fee.
The government expects the auctions to fetch $1 billion, kicking off its plan to monetize national highways that have been built by public funding, a first in the country.
The National Highways Authority of India, or NHAI, has shortlisted 11 highway stretches—seven in Andhra Pradesh and four in Gujarat—for the auction.
A senior road ministry official on condition of anonymity said, “We have shortlisted the first bundle for auction where we are expecting an upfront payment of $1 billion. The bundle comprises 11 packages (road stretches)—seven in Andhra Pradesh and four in Gujarat. The Andhra packages are between Vijayawada to Ichchapuram, while the ones in Gujarat are from Porbandar to Jaitapur and Samakhiali, a small town in Kutch district."
He added these so-called toll-operate-transfer (TOT) projects would be outsourced for 30 years and that the winning bidder will also be responsible for maintaining the highways.
The Cabinet Committee on Economic Affairs (CCEA), chaired by Prime Minister Narendra Modi, last year authorized NHAI to monetize 75 public-funded national highways.
Roads minister Nitin Gadkari had said, “Monetization of public funded highway projects could result in funds in the range of Rs80,000-Rs1 lakh crore (trillion)."
The cabinet had said that only national highways which are operational and have been generating toll revenues for at least two years after the commercial operations date (COD) should be auctioned through the new toll-operate-transfer model.
Under this model, the right of collection of user-fee or toll on selected national highway stretches that have been built through public funding is proposed to be assigned for a certain period to developers and investors against an upfront payment of a lump-sum amount to the government. During the tenure of the contract, the operation and maintenance responsibility would remain with the assigned developer.
The market feedback received by the ministry for road transport and highways and its public sector undertakings like NHAI had indicated that there are several global investors such as the Abu Dhabi Investment Authority (ADIA), which have a long-term investment appetite and are keen on de-risked brownfield road assets.
Jagannarayan Padmanabhan, director, CRISIL infrastructure advisory, said the initiative can help attract a new class of investors to the government’s highways programme of India, which in turn would give the NHAI more elbow room to undertake fresh projects.