Govt may bundle road projects to boost minimum investment size

Earlier this month cabinet has approved a proposal from Road transport and highway ministry to monetise public-funded highway projects

Government is looking at bundling public-funded highway projects for monetisation to ensure a minimum investment size of $100-150 million.

The development comes in the wake of the Cabinet earlier this month giving nod to a proposal from the Road Transport and Highways Ministry to monetise public-funded national highway projects, a move that can garner about Rs 1 lakh crore.

"Bundling of projects may be undertaken on a case to case basis for implementing projects. This would enable the concessionaire to achieve economies of scale, synergy in operations and achieve an appropriate investment size," Ministry of Road Transport and Highways has said.

It said based on market inputs, such bundlings could be done considering "geographical proximity of the National Highways stretches" besides "ensuring minimum investment size of $100-150 million (Rs 650 to Rs 975 crore)".

Also, bundling should ensure adequate toll revenue potential, it said.

Earlier this month, Road Transport and Highways Minister Nitin Gadkari said monetisation of public-funded highway projects could result in funds in the range of Rs 80,000 to 1 lakh crore initially.

Around 75 operational NH projects completed under public funding have been preliminarily identified for potential monetisation using the toll operate transfer (TOT) Model.

The proceeds from monetisation of projects "will go to the consolidated fund of India, and be ring-fenced for utilisation by NHAI via a mechanism similar to the toll plough back," the Ministry said.

The corpus generated could be utilised by the government to meet its fund requirements regarding future development and operation and maintenance of highways in the country and can be used to address development or strengthening of highways in unviable geographies.

NHAI has been given approval for monetising public-funded National Highway (NH) projects which are operational and are generating toll revenues for at least two years after the Commercial Operations Date (COD) through the TOT Model.

For the traditional public-funded NH projects, that is projects constructed under erstwhile Item Rate Contracts or the current Engineering, Procurement, Construction (EPC) lump -sum contracts, after completion of construction and expiry of defects liability period of up to four years, the contractors exit the projects and the entire responsibility for maintenance and operations, including toll collection, lies with NHAI.