The government's decision to monetise 75 road project through toll-operate-transfer (TOT) route is expected to fetch around Rs 35,600 crore, said ICRA. In August last year, the Cabinet Committee on Economic Affairs (CCEA) authorised the NHAI to monetise public-funded national highway projects which are operational and are generating toll revenues for at least two years after the commercial operations date (COD) through the TOT model. The rating agency said the concession period for the TOT projects is expected to be 30 years, with permissible debt up to 80 per cent of the concession fee. "With the absence of long tenure debt, it could be difficult to avail debt equivalent to 80 per cent of the concession fee," it said. ICRA said alternatively, projects with such high debt levels would require refinancing at a later stage. "Though the TOT concessionaires will remain exposed to the traffic risk, the availability of past traffic data will help in better forecasting," the rating agency said. It further noted that the major concern for bidders will be the quality of the road assets for many EPC projects which were irregularly maintained in the past. "The major requirement could be higher than the benchmarks, once the TOT concessionaire takes over the project." ICRA, however, maintained a stable outlook for the sector, mainly because developers find it difficult to achieve financial closure with lenders exercising more caution while taking on additional exposure and secondly because of the leveraged balance sheets of developers.
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