The NHAI has attempted fund raising through the TOT model four times so far. (Representative image)

The National Highways Authority of India (NHAI) will now offer smaller bundles of operational assets worth Rs 500 crore and above, under its asset monetisation programme through the toll-operate-transfer (TOT) model.

Talking to members of the industry body Assocham, minister for road transport and highways and MSME Nitin Gadkari said on Tuesday that the proposal has been mooted keeping in mind the limited financial capability of the domestic investors. Large assets on offer could be taken up only by big-pocket foreign investors in the current scenario.

The NHAI has attempted fund raising through the TOT model four times so far. While the length of the bundles varied between 401-680 km, the base price ranged between Rs 2,166 crore and Rs 6,258 crore. The first one fetched nearly 1.5 times of the base price, the second had to be annulled due to investors’ apathy, the third one went at just a little higher over the base price and the bid for the fourth bundle is still open.

Domestic investors have long been asking for reducing the size of the bundle so that they can afford to take part in the bidding process. Under the TOT model, publicly-funded operational highway projects are given on long-term lease basis to domestic and foreign ‘patient capital’ investors. Successful bidders are required to pay the lease amount upfront and recoup investments & returns by collecting toll over the lease tenure, between 15 and 30 years.

In the Budget for 2020-21, NHAI was authorised to monetise ‘at least 12 lots of highway bundles of 6,000 km within 2024’. Experts say monetisation of these assets could have helped NHAI to raise up to `60,000 crore, at an annual average of Rs 15,000 crore.

The Cabinet Committee on Economic Affairs had, in 2016, allowed NHAI to monetise 75 highway projects through the TOT model. On November 25, 2019, the Cabinet gave NHAI virtually an unfettered authority to make suitable changes wherever and wherever required in its asset monetisation programme through the ToT model.

Experts said, in view of the Covid-19 pandemic, NHAI should not attempt asset monetisation at least till the first half of the current fiscal as it may not get adequate bidders or the desired price, since investors’ are not sure about traffic movement and toll collection on highways.

However, NHAI needs additional funds as it is increasingly awarding projects though the Engineering, Procurement and Construction (EPC) route and its debt mounting.