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Government to Monetise 2 More Bundles of Highway Projects in May: NHAI

The first bundle for monetisation, released by NHAI in October 2017 covered 9 stretches -- five highways running across Andhra Pradesh and four in Gujarat.

PTI

Updated:April 30, 2018, 1:55 PM IST
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Government to Monetise 2 More Bundles of Highway Projects in May: NHAI
Representative Image. (Photo: NHAI)
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After fetching USD 1.6 billion to its kitty, the government is eying more than USD 2 billion by placing two more bundles of road projects under hammer next month, a top official has said. "We will be bringing the next two tranches of highway projects for monetisation under TOT (toll, operate and transfer) in May," NHAI Chairman Deepak Kumar told PTI. Kumar said about 18 to 20 highway projects will be auctioned under TOT next month in two tranches that are expected to fetch over USD 2 billion. "For the entire year, we have fixed a target of about four tranches," he added.

The first bundle for monetisation, released by NHAI in October 2017 covered 9 stretches -- five highways running across Andhra Pradesh and four in Gujarat. An official had earlier said detailed project reports (DPRs) are being formulated for about 25 more highway projects. To make the projects more lucrative, the government is assessing the asset condition through drone videos and network survey vehicles and will provide detailed database to the investors.



On a cumulative basis about 1,000 km will be bid out in the second and third tranches in May, while the govenrment has plans to put the remaining about 640 km in the fourth tranche likely in June or July.

The projects to be auctioned, the officials said, are scattered in nine states. Highway stretches in Odisha and West Bengal are being prepared to be placed under auction in the second tranche, followed by stretches in Rajasthan, Gujarat, Tamil Nadu and Telangana in third phase. The fourth tranche projects will be from Uttar Pradesh, Bihar and Jharkhand.

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Road Transport and Highways Minister Nitin Gadkari had said earlier that government will monetise 105 highway projects in phases that could fetch about Rs 1.5 trillion.

The Cabinet in 2016 had authorised NHAI to monetise public funded National Highway projects. 75 operational NH projects completed under public funding had been identified for potential monetisation, using the TOT Model. TOT model in India has been developed to encourage private participation in the highways sector.

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The TOT model has the concessionaire paying a one-time concession fee upfront (lump sum), which then enables the concessionaire to operate and toll the project stretch for the pre-determined 30 year concession period. This model is applicable to EPC and BOT (Annuity) highway projects, which have completed at least 2 years since date of completion.

The model, as per officials, addresses the risks associated with such a long concession contract and there are multiple provisions in the model concession agreement, which are designed to take care of eventualities like roadway expansion, high toll traffic variation etc to ensure that concessionaires are not exposed to undue risks.

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As per the Economic Survey, India will need about USD 4.5 trillion in the next 25 years for infrastructure development, of which it will be able to garner only about USD 3.9 trillion.
| Edited by: Ayushmann Chawla
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