NHAI Sets Off the Auctioning of the 2nd Phase of the TOT Model

The Ministry of Road Transport and Highways, with its subsidiary, the National Highways Authority of India, launched a Toll-Operate-Transfer (TOT) Model under the Bharatmala Pariyojana, which is India’s second largest highway program, which will see the construction of around 34800 km of national highways, port roads, international and border roads, and expressways throughout the country. The TOT Model aims at gathering funds for the construction of these roads by auctioning the projects for a long-term basis to prospective and eligible investors. The TOT Model auction is divided into 4 phases, Phase 1 of which has been auctioned off at Rs 9681.50 Crores to Macquarie and Ashoka Buildcon as a joint venture in March 2018.

The Request for Proposal (RFP) by Nhai for the auctioning of Phase 2 of the TOT Model has been approved, with the base price having been quoted as Rs 5362 Crores. Anticipated to be bigger than the 1st auction, with the participation of some foreign investors as well.

Phase 2 will be covering 8 road assets across 4 states- Gujarat, Rajasthan, Bihar and West Bengal, totalling up to 586.55km. The auction is speculated to be attended by bidders such as Cube Highways of Singapore, and the Canada Pension Plan Investment Board (CPPIB), which will place bids via construction engineering giant Larsen and Toubro’s IndInfravit, where CPPIB has a 30% share.

The TOT Model, since its launch, has been considered as an efficient method to help progress the highway projects of the country that the NHAI has taken up. With the TOT Model,

1. Investors will deal with lesser construction hassles
2. There will be no delays in land acquisitions
3. There will be transparency in the project process

The MORTH and the NHAI are further planning to monetize more assets under the TOT Model, which will accelerate the Bharatmala Pariyojana. NHAI has set a goal of 75 road assets to be put on lease for a long-term basis. It also anticipates a bigger participation of foreign investors, which will bring about a better revenue for the highway projects. According to the reports of CRISIL, a global analytical company, NHAI expects to raise approximately Rs 60000 Crores over the next 2-3 years.

The highways under the TOT Model follow the Engineering Procurement and Construction (EPC) model, a contract between the government and the private sector investors, where the project is funded entirely by the government, and NHAI recovers toll.

#NHAI #TOTModel #BharatmalaPariyojana

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