NHAI to tweak Toll-operate-Transfer model
The move comes after an NHAI board decided that more options were needed for the Toll-operate-Transfer model to give Indian companies a level playing field
New Delhi: The National Highways Authority of India (NHAI) plans to tweak its newly introduced project for monetizing public-funded national highways, also known as Toll-operate-Transfer (ToT) roads, to give Indian bidders a level playing field.
At present in the ToT model, a raft of toll roads would be auctioned for 30 years; potential buyers would have to make an upfront payment of around $1 billion, making it a challenge for Indian firms to bid.
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 30-year 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 would be the responsibility of the developer.
NHAI chairman Deepak Kumar said, “We plan to experiment with two more options. One where the concession period for ToT projects is reduced from 30 years to 20 years and second where the value of projects would be much less than the present estimates of around $1 billion.”
The move comes after the 11-member NHAI board met on 21 September and decided that more options were needed for the ToT model to give Indian companies a level playing field.
Kumar said the first bunch of ToT roads which would be put up for auction in October would go as per the existing plan.
11 operational national highways—seven in Andhra Pradesh and four in Gujarat—will be auctioned for around $1 billion.
However, the second and third lot of roads, to be auctioned in the last quarter of this fiscal year, will be based on the new options.
A senior government said official on condition of anonymity said the changes would require approval of the cabinet committee on economic affairs (CCEA).
In August 2016, CCEA authorized NHAI to monetize publicly funded national highways that are operational and have been generating toll revenues for at least two years.
75 road stretches (national highways) across the country can be monetized under the scheme.
The project received a positive response, with several international investors such as the Abu Dhabi Investment Authority (ADIA) showing interest in investing in these brownfield road assets. The advantages of the model are that the investors don’t have to go through any hassles of construction or delays due to land acquisition.
The corporate rating agency Icra Ltd in a report on the road infrastructure sector earlier this month estimated that these 75 projects with a road length of 4,376km can yield around Rs35,600 crore under ToT model.