Australia-based Macquarie has successfully made a payment of Rs 9,681.50 crore to the government and all set to function nine highway stretches in its Toll Operate and Transfer (TOT) policy.
Recently, National Highways Authority of India (NHAI) had started India’s first TOT model with an aim to monetize NHs by granting toll collection operations to various private parties for 30 years. Just few months back, first package of nine highway stretches measuring approx. 680 kilometre in Gujarat and Andhra Pradesh was auctioned. Macquarie was amongst the four auction-goers to earn the first bundle of the TOT contract of NHAI.
The second bundle of over 586 kms, is also about to put for auction, and will stretch across four different states starting from Gujrat, Rajasthan, Bihar and West Bengal. The offer has 12 toll plazas across four highways.
On 29th August 2018, Macquarie Infrastructure and Real Assets (India) Pvt Ltd’s Senior MD Suresh Goyal presented the cheque to Nitin Gadkari, Union highways minister, at a roadshow organized by the NHAI. On this occasion, Gadkari said that very soon the second bundle of TOT will be offered and in next few months expect to see several more bundles. Moreover, he also urged private investors to bid for these bundles, as these TOT is a risk-free model. He further added, “India is looking forward to have more foreign investment for its infrastructure sector and having said that our department has introduced this TOT model. As we are all set to hand over the first bundle under TOT, we are confident that this new step will encourage more such awards in coming days. Apart from this, the money we are going to receive will further be invested to lift infrastructure in the country.”
Nitin Gadkari also invited investors to come forward with more new investment models for the infrastructure sector. NHAI has already identified 75 NH another stretches through the country and also set to award fresh contracts to a third party under the TOT model.
The government is all set to start the auction of the second tranche of eight finished national highway projects, and expect to generate about Rs 5400 crore.
Recently NHAI has announced to plan and conduct roadshows in Canada and the US with an aim to pull the attention of international bidders. In fact, NHAI is expecting that these roadshows might also receive a god response in addition to the participation of pension and insurance funds that might be also interested to invest in these contracts. Important aspect to note is that the TOT (Toll-Operator Transfer) contractor will have the complete permission to collect and manage toll on these stretches for the duration of 30 years.
Many industry experts are considering this deal as one of the major and biggest foreign investments in India’s public infrastructure sector. Adding to that some even consider the auction of completed projects under the TOT model as the most unique and innovative mode as it would further help in nurturing funds. These funds would help in undertaking of the construction of development of national highway projects and reducing dependency on government expenditure.
The National Highways Authority of India (NHAI) has announced to release its second bundle under the highways’ toll-operate-transfer (TOT) scheme to effectively monetize 586.55 kilometers of national highways. In fact, the authority has decided to select eight stretches of national highways across different states – Gujarat, Rajasthan, West Bengal and Bihar to put on auction. NHAI is ready to acknowledge the bids till November 5 for various selected highways.
TOT is one of those few mechanisms that has been adopted by NHAI where the authority auctions operational assets. The important point to note is that the top bidder would require to pay the money (bid amount) upfront with NHAI and the authority can make use of this capital to further invest in the creation of newer highways. However, against the money, the bidder has got the right to work and preserve the highways via toll collection.
Recently, this year in the month of March, NHAI has auctioned the first package of 648 kilometers. The Authority mopped up Rs 9,681.5 crore from joint ventures of Macquarie and Ashoka Buildcon, who took the right to run and keep up nine stretches. Apart from all these, NHAI had also fixed the initial projected concession worth at Rs 6,260 crore. In the second round of bidding, the initial estimated concession cost was decided at Rs 5,362 crore.
The Cabinet Committee on Economic Affairs had approved and gave permission to NHAI in 2016 to further raise the funds via asset monetization program. The authority has also recognized 75 selective highway projects that could be put up from auction.