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NHAI Invites Bids For Fifth TOT Bundle With 20 Years Contract Period, Scraps Fourth ToT Bundle Auction
Highway (representational image) (NHAI)
The National Highways Authority of India (NHAI) has invited bids for the fifth bundle of National Highway Projects under Toll-Operate-Transfer (TOT).
The two stretches on offer under TOT-5 are Palanpur – Radhanpur – Samkhiyali section of NH 27 from km 589.6 to km 536.0 under TOT-5(A-1) and Palanpur – Radhanpur section of NH 27 (from km 536.0 to km 472.8) and Radhanpur – Samakhiyali section of NH 27 (from km 472.8 to km 430.1) under TOT-5(A-2).
Total contract period of TOT is 20 years in which the awarded concessionaire would be required to maintain and operate the stretch. In lieu of this, Concessionaire will get right to collect and retain user fee for these stretches for 20 years
The last date of submission of bids is 23 December 2020.
NHAI also announced that it is scrapping the auction for the fourth bundle of highway projects to be awarded to a private operator under the toll, operate and transfer (ToT) model. NHAI issued the tender cancellation notice on Monday (Sep 28) ahead of the 30 September deadline for for submission of price bids. The Union government had recently decided to discontinue the practice of announcing the initial estimated concession value (IECV) for such projects at the beginning of the tendering process.
In October 2019, the NHAI invited bids for the fourth bundle of road assets. The highway agency had set the initial estimated concession value (IECV) at Rs 4,170 crore for seven stretches totalling around 401 km, spread across Jammu & Kashmir, Punjab, Haryana, Rajasthan, Madhya Pradesh and Maharashtra. However in January, the NHAI pruned the value of the package by half to attract more bidders.
The Union Cabinet in 2016 had authorised NHAI to monetise public-funded National Highway projects. 75 operational NH projects totalling 4,500 km and completed under public funding had been identified for potential monetisation using the Toll-Operate-Transfer (TOT) model TOT Model.
TOT model was developed with the aim to encourage private participation in the highways sector.
Under the TOT model, concessionaire paying a one-time concession fee upfront (lump sum), which then enables the concessionaire to operate and toll the project stretch for the pre-determined concession period ranging from 20 to 30 years. This model is applicable to EPC and BOT (Annuity) highway projects, which have completed at least 2 years since the date of completion.
The model seeks to address the risks associated with such a long concession contract and there are multiple provisions in the model concession agreement, which are designed to take care of eventualities like roadway expansion, high toll traffic variation etc to ensure that concessionaires are not exposed to undue risks. The TOT operator has a right to collect user fee and has an obligation to operate and maintain the stretches during the concession period. The TOT model has been developed to encourage private participation in highway sector and generate more resources for construction of future highways.
In April 2018, NHAI signed a 30-year concession agreement with Macquarie Infrastructure and Real Assets (MIRA), world’s largest infrastructure fund manager, to monetise a bundle of nine fully operational highways involving 648 km in Andhra Pradesh and Gujarat. This was the first concession agreement signed under the Toll-Operate-Transfer (TOT) model. MIRA by making an upfront payment of Rs 9681.50 crores in return for maintenance of the highways and the 30-year toll collection rights.
Buoyed by the huge over-subscription of the maiden bundle of 9 highway projects under TOT model, the government went in for monetisation of the second tranche of road projects totalling 586 km
of national highways in Rajasthan, Gujarat, West Bengal and Bihar. The base bid price was set at Rs 5,362 crores with the winning bidder receiving a concession period of 30 years. The second bundle, however, was cancelled last year after the response was muted and the bids were below the base price.
NHAI is looking to raise Rs 84,800 crore by offering 6,165 km of highways under ToT by 2024
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