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Photo: Mint
Photo: Mint

Lockdown derails NHAI’s plan to monetize $1 bn of toll road assets

As part of the plan, NHAI was selling bundles of road projects under the toll-operate-transfer model

The countrywide lockdown has hit the National Highways Authority of India’s (NHAI) plans to monetize almost $1 billion of toll roads, as investors wait out the uncertainties of the virus crisis, said three people aware of the development, requesting anonymity.

The delay could stretch NHAI’s balance sheet, given that it has suffered losses on toll revenue, with collections suspended till 20 April and dwindling traffic. On 15 April, credit rating agency Icra had said that NHAI could lose as much as 1,181 crore in toll revenue due to the lockdown.

As part of its asset monetization plan, NHAI was selling bundles of road projects under the toll-operate-transfer (TOT) model, under which long-term concessions for collecting toll revenues are auctioned to the highest bidder.

Last October, NHAI had invited bids for its fourth bundle of road assets (TOT4). The initial estimated concession value was set at 4,170 crore for seven stretches totalling around 401km, spread across Jammu and Kashmir, Punjab, Haryana, Rajasthan, Madhya Pradesh and Maharashtra. The size of the package was also reduced to around 2,000 crore to woo investors.

However, with low investor interest, the sale process has seen multiple postponements in bid submission deadlines, with the latest revision coming last month, extending the deadline to 15 May.

Even this deadline is likely to get pushed further, said the first of the three people cited above. “Investors have asked NHAI to postpone the bids further as they want to see how toll collections revive when the lockdown is lifted. In the current circumstances, it will be difficult for investors to bid for these assets."

In an email response to Mint’s queries, NHAI said that it is yet to take a call on the bid deadline. “The decision for extending the deadline of TOT4 beyond 15 May has not yet been taken. It is likely to be postponed due to uncertainties of traffic volume," it said.

While the sale of TOT4 bundle is yet to take off, the TOT3 bundle worth 5,011 crore saw private equity-owned roads platform Cube Highways emerge as the successful bidder last December. But this, too, got stuck due to covid-19.

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