New Delhi: Plans to operationalize the toll-operate-transfer (TOT) model that is aimed at monetizing India’s publicly funded national highways have gained traction with at least a dozen investors showing interest.

The plan, the first of its kind in the country, has seen interest from the likes of Abu Dhabi Investment Authority (ADIA), Singapore’s sovereign wealth fund GIC Pte. Ltd, Singapore’s state-run investment firm Temasek Holdings Pte. Ltd, Hastings Funds Management Ltd, Keppel Infrastructure Fund Management Pte. Ltd, Mizuho Asia Infra Capital, Macquarie Group Ltd, Morgan Stanley Infrastructure Inc., Equirus Capital Pte. Ltd, I Squared Capital Advisors LLC, JP Morgan Asset Management Inc., and Infrastructure Leasing & Financial Services Ltd, road transport and highways minister Nitin Gadkari told the Lok Sabha on Thursday.

Under the TOT model, stretches of highways that have already been built with public funding are proposed to be assigned for 30 years to developers and investors against upfront payment of a lump-sum amount to the government.

They will then operate them as toll roads for the duration of the contract, with the responsibility of both operation and maintenance.

The cabinet committee on economic affairs (CCEA), chaired by Prime Minister Narendra Modi, last year authorized National Highways Authority of India (NHAI) to monetize 75 public-funded national highways, which together can fetch around Rs1 trillion. The model will help NHAI raise upfront capital to fund road projects based on the engineering, procurement and construction (EPC) and hybrid annuity models.

“Monetization of public funded, operational NH projects through the Toll –Operate –Transfer (ToT) model has been approved by the CCEA. Seventy-five public funded NH projects with aggregate length of 4,500 km and annual toll revenue collection of around 2,700 crore have been identified under the model," Gadkari said in his written reply to the Lok Sabha.

To start with, 11 operational stretches of public funded national highways are set to be auctioned in August for an expected $1 billion in total, Mint reported on 19 July.

Of the 11 highway stretches which have been shortlisted by NHAI, seven are in Andhra Pradesh and four in Gujarat.

“Preparatory activities including finalization of the Model Concession Agreement and RFP (request for proposal) document have been completed and the transaction advisor has been identified. The first round of bidding for ToT projects is to be held shortly," Gadkari added.

Experts termed the investors’ interest significant, given that it is the first exercise of this type in the country.

“There is a lot of interest from the market. The time is right to experiment and push it through. The resources raised will help meet the infrastructure requirements," said Jagannarayan Padmanabhan, director, Crisil Infrastructure Advisory.

The government’s interest in the exercise stems from the large investment requirement for creating physical infrastructure to boost the economy.

India plans to invest as much as Rs3.96 trillion in the current financial year to bankroll its new integrated infrastructure plans comprising roads, railways, waterways and civil aviation.

Driven by its interest ADIA, the sovereign wealth fund of Abu Dhabi was keen for a government-to-government (G2G) deal, Mint reported.

The National Democratic Alliance government has lined up ambitious infrastructure plans such as Sagarmala and Bharatmala. While the total road length to be developed as expressways under Bharatmala will be around 51,000km, the Sagarmala programme envisages construction of new ports to harness the country’s 7,517-km-long coastline and setting up as many as 142 cargo terminals at major ports.

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