Strong response for 5th round of highway monetisation programme through TOT

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Updated: Oct 21, 2020 9:15 AM

Close on the heels of annulling the fourth bundle, presumably due to lack of investors’ interest, investors’ response for the fifth TOT should cheer the NHAI.

Under the fifth round of TOT, NHAI is offering for a 20-year lease period two bundles with a total length of 159.5 km.Under the fifth round of TOT, NHAI is offering for a 20-year lease period two bundles with a total length of 159.5 km.

The National Highway Authority of India (NHAI) on Tuesday saw active participation by potential investors in the first pre-bid meeting for the fifth round of highway monetisation programme through the toll-operate-transfer (TOT) route, authority’s chairman S S Sandhu said.

Under TOT operational, the national highways are given on long-term lease (15-30 years) to private entities on a long-term concession basis against an upfront payment. During the concession period, the TOT operator collects user fee on the stretches following the prescribed rates by the NHAI to recoup their investments; but the operator has to operate and maintain the stretches.

Under the fifth round of TOT, NHAI is offering for a 20-year lease period two bundles with a total length of 159.5 km. The last date of submission of the bids for both the bundles is December 23.

“Around 50 officials from different companies, both domestic and overseas, took part in the virtual meeting held on Tuesday. Among the investors those took part in the pre-bid meeting includes L&T, Cube Highways, Adani, ISADAK, CDPQ (a Canadian pension fund company) and Global Infrastructure Partners among others,” said an NHAI official.

Close on the heels of annulling the fourth bundle, presumably due to lack of investors’ interest, investors’ response for the fifth TOT should cheer the NHAI. The proceed from the asset monetisation programme of the authority will be used to repay debt, which mounted to Rs 2.28 lakh crore, as on February 2020, and to develop highways.

For the current fiscal, NHAI has 4,500 km project awards target. During April-September period, it has awarded 40 projects measuring 1,330 km, 1.6 times higher than 828 km awarded in the same period last fiscal. In the current fiscal, it also hopes to build 4,500 km highway, up from 3,979 km in 2019-20.

Just a few days before the authority invited bids for the fifth bundle, NHAI decided not to disclose floor price for highway bundles under the TOT model at the time of inviting bids; it would rather leave it for the potential bidders to discover the price. The floor price or the initial estimated concession value (IECV) will now be disclosed by NHAI only “after receipt of technical bids and after declaring the selected bidder.” The highest bidder will take the bundle on a long-term lease.

NHAI’s first public-funded highway asset monetisation programme through the TOT model fetched the authority `9,681 crore — 1.5 times higher than the base price set by NHAI in 2018. None of the bidders matches up the floor price of `5,632 for 586.55 km length in the second bundle forcing NHAI to abandon the plan. Cube Highways quoted just a little above the IECV to emerge as the highest bidder for the third bundle. The fourth bundle has been annulled.

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