Govt to halve size of road monetisation contracts

The next round for TOT projects would have a handful projects totalling about $500 mn, from $1 bn earlier

The Union road transport ministry and the National Highways Authority of India (NHAI) have decided to reduce by half the size of road monetisation projects in the next round of bids. 

The next round for TOT (toll, operate, transfer) projects would have a handful projects totalling about $500 million, from $1 billion earlier.

“The total project size has been reduced to half but the packages would still be in the range of $200-220 million,” an NHAI official told Business Standard. Essentially, he explained, for faster completion of the tendering process.

The process for the first tranche of road monetisation is underway and 10 bidders have bid for the nine TOT contracts. “By January 7, we should be able to award the projects. By the end of March 2018, revenue would start coming in,” the official said.

Investors, including global pension funds and private equity firms, have shown interest in India’s infrastructure sector. The selection of projects to be bid out in the first round was done while keeping in mind the interest of international investors.

“These investors wanted that the size of a contract should not be less than $200 mn. Lower value projects were deemed financially unviable for these investors,” the official added.

The Cabinet Committee on Economic Affairs had on August 3 last year authorised NHAI to monetise 111 publicly funded projects. A list of 75 operational ones was prepared, using the TOT model. The proceeds from these would go for development, operations and maintenance of highways.