NHAI moves on TOT model to end highway project drought

Finally, National Highways Authority of India (NHAI) has come out with a tender to monetise road assets through toll-operate-transfer (TOT) model.

The government highway developer has released a Request for Proposal to attract private players to take up nine operational highway projects in Andhra Pradesh and Gujarat.

The government is likely to earn a minimum of Rs 6,258 crore from the 680.64-km of highways having a concession period of 30 years.

Under ToT model, an upfront payment will be paid to NHAI against awarding operation and maintenance rights to the private company.

Of the nine projects, six are from Andhra Pradesh (National Highway 5) and balance three in Gujarat (National Highways 8A and 8B). The ones in the southern state are – Siddhantham-Gunduglanu (71.95-kms), Diwancheruvu-Siddhantham (49.04-km), Annavaram- Diwancheruvu (70.98-km), Ankapalli-Annavaram (88.53-km), Icchapuram-Narasannapeta (96.70-km) and Puintola-Icchapuram (64.40-km). The three projects from the western state are – Bamanbore-Garamore (71.94-km), Garamore-Samakhiyali (51.46-km) and Porbandar-Jetpur (115.64-km).

Jagannarayan Padmanabhan, director and practice leader – Transport and Logistics, CRISIL Infrastructure Advisory said, "The first-of-its-kind monetisation of infrastructure assets in the road sector is being rolled out, a successful transaction can open up various other infrastructure assets which have a demonstrated revenue track record and set out a roadmap in other areas such as rail, airports, desalination plants etc, both at the state and central government level."

Bid for TOT bid is scheduled to open on January 10.

Meanwhile, NHAI is looking at tweaking TOT model from the present 30 years concession period to 20 years. One of the reasons for this modification is upfront payment that is more in case of three decades of tolling rights.

Another policy that the national highway builder is looking at modifying is reducing the valuation of highway projects less than $1 billion.

Officials are of the opinion that if such upfront payment value is reduced, more Indian firms will have opportunities in participating in this latest financial model or else foreign players have an edge over Indian companies.

National Highways Authority of India