The total length of these highways is just under 700 km.
NEW DELHI: The government’s ambitious plan to monetise publicly funded, commercially operational national highway projects has got a big boost.
Four companies — Brookfield Asset Management, Macquarie, IRB Infrastructure and Roadis-NIIF — have put in bids for nine national highways on offer in the first round. The National Highways Authority of India (NHAI), which invited bids for these highways, hopes to generate more than Rs 6,000 crore by leasing out the roads under the ‘toll-operate-transfer’ (TOT) model.
The auction will involve five highways running across Andhra Pradesh and four in Gujarat. The total length of these highways is just under 700 km.
The Cabinet Committee on Economic Affairs in 2016 had authorised NHAI to monetise 75 publicly funded national highways that are operational and have been generating toll revenues for at least two years.
The government expects the TOT deals to bring in at least Rs 60,000 crore. This will provide NHAI funds to build more highways, filling in for the private sector that is reluctant to invest in new highways. A second batch of around five national highways with a total length of 500 km would be put out for bidding in March.
Under the TOT model, pension funds and PE firms are allowed to lease governmentowned national highways for 30 years by making an upfront payment. The lessee, in turn, gets the right to collect the toll, operate, manage and maintain the highway stretch. The government can also increase the concession period in later stages, if the concessionaire wants it.
"Asset recycling of public funded infrastructure in India has achieved its first milestone. Three international investors and one domestic company have come forward to bid for national highways,” NHAI member-finance Rohit Kumar Singh told ET.
“Once it is successful in the highways sector, other sectors such as power transmission, oil and natural gas could replicate the same model, thereby unlocking the huge offbudget funding," he added. The government will line up more such projects for bidding early next year.
Technical bids for the national highways on offer in the first round will be opened on Friday. After technical qualification assessment, financial bids will be opened next week. “Only then we'll be able to make the quotes pubic," Singh said. NHAI will provide a risk cover to the lessee against circumstances such as a rapid fall in toll collection and structural or engineering fault on the highways.
