Developers Seek Overhaul Of BOT Terms To Revive Highway Investments: Report

Road developers have called on the National Highways Authority of India (NHAI) to introduce further amendments to the Model Concession Agreements (MCAs) for build-operate-transfer (BOT) projects, particularly to restructure the termination payment framework and make such ventures financially viable, Economic Times reported.

During a stakeholder consultation convened by NHAI on Saturday (18 October), industry representatives presented over half a dozen proposals aimed at improving risk sharing and ensuring quicker rollout of BOT projects.

The National Highways Builders Federation (NHBF), urged the government to revisit the existing termination payment model to better reflect shared demand-side risk rather than treating such cases as concessionaire defaults.

The federation also proposed adopting a Global Navigation Satellite System (GNSS)-based direct toll plaza transaction mechanism to standardise toll data and ensure transparency in revenue calculation.

It further suggested that prolongation cost compensation should be linked to a fixed percentage of the Total Project Cost (TPC) to provide “equitable reimbursement of financing and holding costs.”

The NHAI has lined up 12 highway projects spanning over 1,000 km under the BOT model, with an estimated capital cost of Rs 62,125 crore. However, experts said more reforms are essential to attract private investors.

Kuljit Singh, partner and national infrastructure leader at EY India, noted that BOT toll projects face the risk of traffic diversion and demand significant equity infusion.

He suggested adjusting concession periods by up to 10 per cent, defining pass-through provisions for annual charges, and revising safety-related penalties which may be beyond developers’ control.

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