New Delhi: India’s attempt to bridge its infrastructure investment gap through the marque toll-operate-transfer (TOT) highways model has gained traction with Brookfield, Macquarie Group, and a joint venture between Holland’s Roadis and National Infrastructure and Investment Fund (NIIF) placing their bids for the 648km offered in the first tranche.
The only Indian firm to participate is IRB Infrastructure, which bid along with Italy’s Atlantia.
NIIF has been funded by the government of India and Abu Dhabi Investment Authority. These bids for national highways across the states of Andhra Pradesh and Gujarat have been called by state-run National Highway Authority of India (NHAI) and are expected to fetch around $1 billion. The technical bids will be opened on Friday with the successful bidder chosen within 10 days.
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 lump-sum amount to the government.
NHAI member (finance) Rohit Singh confirmed the bidders’ names and said, “The response is outstanding, given the complexities involved in operating and maintaining roads in India for 30 years especially with issues and challenges like capacity augmentation."
According to NHAI, various national highways will be auctioned in bundles for a stipulated time period to generate funds for India’s ambitious road project Bharatmala. Mint reported on 20 February that NHAI was planning to auction toll collection for road length totalling around 1,720km in the next tranches.
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 the both the concessionaire and NHAI.
The cabinet committee on economic affairs in 2016 authorized NHAI to monetize 75 public-funded national highways with a road length of around 4,500km, 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.
An IRB Infrastructure Developers Ltd spokesperson confirmed the firm’s participation in an emailed response and said, “We confirm our participation for TOT project in Joint Venture with Atlantia."
Queries emailed to Brookfield, Mcquarie Group and Roadis on Thursday evening weren’t immediately answered. NIIF and Atlantia spokespersons couldn’t be reached for comments.
With India poised to face a $526 billion infrastructure investment gap by 2040, according to the latest Economic Survey presented in January, road transport and highways minister Nitin Gadkari has been very aggressive in promoting the model and has been participating in various road shows to generate interest for the project.
Mint reported on 4 August 2017 that at least a dozen investors had showed interest in the first tranche under the TOT model. The plan has generated interest from the likes of Abu Dhabi Investment Authority, 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.