National Highways Authority of India (NHAI) has offered its third bundle under its toll-operate-transfer (TOT) model that has caught the interest of around 27 firms. The list contains a mix of domestic and international companies, including- Macquarie, Brookfield, Roadis, Adani and IRB Infrastructure.
With a floor price of 49.95 billion, the recent proposal consists of nine highway stretches that run through the states of Uttar Pradesh, Bihar, Jharkhand and Tamil Nadu covering a total distance of approximately 566 km.
The TOT project is based on the system of public-funded highways, that are up and running, being leased out to domestic and international investors for a period of 30 years. The lease amount is required to be paid beforehand by the winning bidders. The amount is then recuperated through toll collection till the tenure is up.
NHAI has reportedly sought to address issues of unwillingness to pay tolls by locals and law and order conditions, in order to increase investor interest towards the third bundle. The government has made provisions to introduce electronic tolling systems to curb any inefficiencies will support the success of the bid.
All firms are expected to submit their bids by the 11th of September, 2019 and the successful bidders will be intimated in a months’ time.
The first bundle of the TOT project was awarded to Australian company Macquarie with a quotation of 96.81 billion against the base price of 62.58 billion. The second project, with eight highways traversing through a total length of 586.55 km was a bust, given the bids didn’t surpass the floor price.
The TOT model has enabled NHAI to monetise about 75 highways, allowing it to raise necessary funds.