Pension funds from abroad are most likely to find their way into the maintenance of the Outer Ring Road (ORR), if the proposal to hand over the management of the 158-kilometre road encircling the city to private players becomes a reality.
According to estimates, the Toll-Operate-Transfer (TOT) model, as envisioned by the Hyderabad Metropolitan Development Authority, is expected to fetch the cash-starved urban development body between ₹2,500 crore and ₹3,000 crore. “Foreign investors are flush with pension funds from their citizens, as the interest rate on savings in developed countries is not more than 2% to 3%. Here, even if calculated at 6%, the returns for us would be better than the toll amount we are receiving,” said Metropolitan Commissioner T. Chiranjeevulu, explaining the rationale behind the decision.
Though developed by the NHAI, the HMDA might become the first body in the country to adopt the TOT concept if the proposal gets through, he said.
Many foreign investors from countries such as USA, Canada and Australia are keen on investing their pension funds in infrastructure projects in developing countries.
As of now, eight out of the 13 packages of the ORR are under maintenance by the HMDA, while five have been handed over to private companies.
Toll collection revenue accruing to the HMDA from the private agency stands at ₹16 crore to ₹17 crore per month. As per the TOT proposal, the HMDA will auction the ORR toll collection for 20 to 30 years, for a lump-sum of ₹2000-3000 crore payable upfront, thereby wriggling itself from the obligation of repairs and maintenance.
A feasibility study is under way by LEA Associates and CRISIL, the transaction advisor and technical consultant respectively, who will also assist the authority in calling for global tenders.
