IRB, Cube Highways and L&T-NIIF combine in fray for highways third TOT bundle

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New Delhi | November 12, 2019 12:42 PM

Technical bids, containing the bid amount, will be opened on November 13.

The National Highways Authority of India (NHAI) aims to garner close to Rs. 5,000 crore as one-time, upfront payment from the investors in the asset.

IRB Infrastructure, I Squared Capital-backed Cube Highways and a consortium of Larsen & Toubro and National Investment and Infrastructure Fund (NIIF) have bid for the third bundle of highway projects under the toll-operate-transfer (TOT) model.

The National Highways Authority of India (NHAI) aims to garner close to Rs. 5,000 crore as one-time, upfront payment from the investors in the asset.

Sources said though a bid from Adani Group was widely expected, it refrained from bidding for the nine stretches on offer, measuring a total of 566.27 km.

Technical bids, containing the bid amount, will be opened on November 13.

Around a dozen domestic and foreign firms including Ma-cquarie, Brookfield, Roadis, Adanis and IRB Infrastructure, had initially evinced interests to take on long-term (30 years) lease for these projects. MEP Infrastructure and Autostarde had also bought request for proposal documents and attended pre-bid meetings with the authority.

Under the TOT model, publicly funded operational highway projects are given on lease to domestic and foreign “patient capital” investors. Successful bidders are required to pay the lease amount upfront which they can recoup by collecting toll over the lease tenure.

The NHAI had thrice extended the deadline for submission of final bids by the bidders for the latest TOT bundle.

From the originally set deadline of September 11, it was first extended to September 30, then to October 30 and finally, to November 11.

NHAI has plans to raise upto Rs. 10,000 crore in the current fiscal from monetisation its operational assets. The authority has already issued request for proposal (RFP) for the fourth bundle through which it intends to monetise seven stretches, measuring 401 km, for a minimum of Rs. 4,170 crore. Facing a fund crunch, a lot of NHAI’s present and future highway building roadmap hinges on the success TOT.

For the first time in October 2017, NHAI had invited bids for such public-funded highway projects. In the first tranche, nine highway projects were offered and Australia-based Macquarie bagged them quoting Rs 9,681.5 crore for the total length of 680.5 km against the floor price of Rs 6,258 crore.

NHAI’s second TOT attempt, however, failed. Against its floor price of Rs 5,632 crore from eight highway projects with a total length of 586.55 km, the highest bidder (Cube Highways) quoted only Rs 4,612 crore, forcing the authority to abandon the plan. Asset recycling of this kind is being tested in India, following many global precedents.

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