Cube Highways' Rs 5,000-cr bid the highest for third lot of TOT projects

The National investment and Infrastructure Fund quoted Rs 4,230 crore while Mumbai-based IRB quoted Rs 3,510 crore

Cube Highways has emerged as the highest bidder for the third bundle of the toll-operate-transfer (TOT) projects offered by the National Highways Authority of India (NHAI) by quoting Rs 5,011-crore fee.

The National investment and Infrastructure Fund (NIIF) quoted Rs 4,230 crore while Mumbai-based IRB quoted Rs 3,510 crore.

The authority had estimated around Rs 4,995 crore from monetisation of this tranche of 566 km of highways under the TOT model, sources said. The first bundle of the monetisation programme gave NHAI Rs 9,682 crore.

The second bundle was cancelled last year after the response was lukewarm and the bids were below the base price.

The bids for the third bundle were invited on June 13 this year, and the last date for the submission of bids was September 11. Nine highway stretches of 566.27 km in Uttar Pradesh, Bihar, Jharkhand, and Tamil Nadu are on offer in the third bundle.

Several more bundles will be offered in the months to come, NHAI had said at the road show for the third bundle. Crisil Infrastructure Advisory were the transaction advisors for this tranche.

The government is banking on the TOT model for monetisation of completed road stretches. These contracts requires private operators to manage and maintain roads while collecting toll on them. Since these are constructed projects, there is no construction or road acquisition risks involved the contracts.

The first tranche of nine projects — totalling about 680 km roads in Andhra Pradesh and Gujarat — was awarded in 2018. Huge interest was shown by foreign investors. TOT Bundle-I was awarded to Macquarie for Rs 9,681 crore, which was 1.5 times the estimate. 

The second bundle of over 586 km spread over four States — Rajasthan, Gujarat, West Bengal, and Bihar, with 12 toll plazas across four highways was also offered last year.

TOT model in India has been developed to encourage private participation in the highways sector.

The TOT model has the 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 30 year concession period.

On August 3, 2016, the Cabinet authorised the NHAI to monetise public-funded national highway projects that are operational and are generating toll revenues for at least two years. 

The transport sector had been allocated an enhanced outlay of Rs 83,000 crore in the Union Budget for development of roads and highways. The remaining funding requirement is to be met through direct investment by private companies or the monetisation programme.