The TOT model is part of the government’s efforts to monetize public infrastructure and build new assets.
As a part of the changes, public funded projects-- engineering, procurement and construction (EPC) and Build Operate Transfer (BOT) -- that are operational for more than a year after beginning commercial operations can be monetized through TOT model. Till now, the model authorized NHAI to monetize such projects that were operational for atleast two years.
“Public funded National Highway (NH) projects which are operational and have toll revenue generation history of one year after the Commercial Operations Date (COD) shall be monetized through the TOT Model. The monetization will be subject to approval of the competent authority in ministry of road transport and highways (MoRTH)/NHAI on a case to case basis," according to a government statement.
Another key change that the Cabinet approved is that now NHAI has been allowed to vary the concession period of toll projects between 15-30 years.
Under TOT, the highest bidder wins the rights to operate and maintain operating road assets for 30 years, with rights to toll revenues from these assets until then. This model is more attractive for investors as they don’t have to build an infrastructure project from scratch.
The government has identified around 75 operational highway projects for potential monetization under the TOT, bundled into 10 separate bids to attract economics of scale for the private sector.
“The corpus generated from proceeds of such project monetization shall be utilized by the government to meet its fund requirements regarding future development and O&M (operation and maintenance) of highways in the country. The model would facilitate efficient toll realization through private sector," the statement said.
Road minister Nitin Gadkari had in September told Mint that the highways authority will rely on monetizing assets as a source of funds in the coming years and the need to build national highways will reduce with the completion of the government’s ambitious Bharatmala road project.
In 2016, the Cabinet authorized NHAI to monetize 75 public-funded national highways with road length of around 4,500 km. The TOT model was introduced by the government to increase private sector participation.
NHAI has already monetized one bundle of projects under TOT Model, generating a revenue worth ₹9681.50 crore for the government. However, the second bundle saw deviation in the market valuation of assets from NHAI's valuation.