The National Highways Authority of India (NHAI) has identified 53 highway projects worth Rs 2.1 trillion to be developed through Built Operate Transfer (BoT) model. This marks a big shift in the resource generation strategy, after long years of low private risk capital raised its debt burden to very high levels.
Around 5214 km road stretches with high traffic density will be developed through BoT. The maximum number of BOT projects (14) will be in Maharashtra. The length of these would be 522 km and cost Rs 39477 crore. Uttar Pradesh will have six highways of 1344 km at the cost of Rs 50,333 crore.
Jammu and Kashmir, Haryana, Punjab, Rajasthan, Telangana and Uttrakhand will have six new highways of 490 km on BoT at the cost of Rs 15,600 crore. Seven projects in Andhra Pradesh and four in Bihar will be developed at the total cost of Rs 28,027 crore.
Four BoT projects in Tamil Nadu will come up with Rs 26,061 crore investment. As per the Centre’s ‘Vision 2047’ Plan, a large number of high-speed corridors are envisaged to be developed. Robust Public Private Partnership in development of the road sector will play a pivotal role in realising this vision, according to a NHAI statement.
The government wants to push BOT in a big way to bring back private participation in highway construction. In the BOT model, winning the concession builds and operates the highway thus saving resources of the government. However, there is a provision in some cases for capital grants of up to 40% in the BOT model also.
During 2007 and 2014 only BOT was used for building highways. With the disputes and delays that the system ran into, the pace of highway construction slowed down considerably.
In 2018-19 and 2019-20, no road concessions were awarded on the BOT model. Officials say that the problems that the BOT faced have been sorted out and the contractors are willing to bid for highways under this model again.
In the last few years, almost the entire cost of highway construction has been borne by the government through Hybrid Annuity Model (HAM) and Engineering Procurement and Construction (EPC). This has resulted in a big jump in budgetary support to NHAI. This year the budget will provide Rs 1.62 lakh crore to NHAI as against Rs 1.41 lakh crore last year. In 2021-22 NHAI had got Rs 57081 from the budget and rest from debt. From the 2022-23 budget NHAI was barred from raising money through bonds
To make BoT more attractive the modifications has been proposed in the Model Concession Agreement (MCA) of BOT (Toll) to address concerns and remove roadblocks highlighted by the stakeholders.
The proposed modifications include various provisions to eliminate discrepancies such as determination of termination payments, modifications in Concession Period based on actual traffic (PCU) Vs tolling groups of vehicles, actual traffic exceeding design capacity to be re-visited, and compensation for delays on the part of Authority as well as force-majeure cause to be clearly defined termination payments before project completion with a new provision of Buy Back in case of Additional Tollway/Competing Road.