The National Highways Authority of India (NHAI), which drew a blank in its previous attempt to sell road assets under the toll-operate-transfer (TOT) model, on Thursday came up with its third TOT bundle, which is now up for bidding to private operators for an initial estimated concession value (IECV, or reserve price) of 4,995.48 crore.

The latest attempt by NHAI comes less than a month after the Bharatiya Janata Party (BJP)-led National Democratic Alliance (NDA) was returned to power for the second consecutive term in May. On Thursday, NHAI called for a tender inviting bids for its third attempt to auction public highways under the TOT model.

In this third bundle, NHAI has placed 566.27km comprising nine national highways under the hammer. More than 243km are stretches in Tamil Nadu (Madurai to Kanyakumari on NH7), a 73.79km stretch is between Hazaribagh-Ranchi in Bihar (NH28) and a 73.79km stretch is of the same highway extending into Jharkhand. There are stretches of up to 169km in Uttar Pradesh, which on three different highways (NH 24, 25, 26).

“NHAI has actively sought inputs from industry this time, from all stakeholders and possible bidders," said Sandeep Upadhyay, managing director and chief executive officer, Centrum Infrastructure Advisory Ltd. “They were just waiting for the elections to get over to refresh the model and use the lessons learnt from last time, especially in terms of scoping the project and industry’s appetite for a large bid. Long-term investors, especially, are now more positive about making large commitments after the NDA was voted back to power," Upadhyay said.

The third bundle will be the smallest offered so far under TOT, in terms of both kilometer length and the base price expected. NHAI’s first attempt at TOT met with thumping success. The second bundle at the end of last year was eventually cancelled after NHAI received bids that were lower than the base price and the highways authority faced issues with the bidders.

The latest attempt is expected to be considered a test case for the TOT model.

Mint has reviewed a copy of the tender document. The last date for submission of bids is 11 September.

The TOT model was part of the efforts of the previous term of the NDA government to monetize operating public infrastructure and build new assets under programmes such as Bharatmala.

Under the model, the highest bidder wins the rights to operate and maintain the assets over a 30-year concession period, with rights to toll revenues from these assets until then.

The success of the first round in February 2018, where the winning bidder Macquarie offered 9,681 crore against NHAI’s expectation of 6,258 crore for 700km of national highways, led the government to set a target of raising around 2 trillion through TOT in five years and copying the model to privatize state-run airports.

For fiscal year 2019-20, NHAI has set an all-time high target of constructing 4,500km of roads, 35% more than the 3,320km built last year.

It also proposes to award 6,000km of highways to be built under the hybrid annuity model.

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