Road contract monetisation: Firms submit bid for toll-operate-transfer plan

As many as four firms have submitted their bids for the first batch of toll-operate-transfer projects, kick-starting the Union government’s road contract monetisation plan.

MAIF 2 Investment India 2 Pte Ltd, Singapore, IRB Infrastructure Developers Ltd, Mumbai, Spice Holding I Pte Ltd, Singapore, and a consortium of Roadies Concessions Infrastructure Holland BV, Netherlands & NIIF Delhi have submitted bids for the nine TOT contracts offered by the National Highways Authority of India (NHAI).

By tendering these contracts, the central government would receive upfront payments that would further be invested in the EPC (engineering-procurement-construction) contracts and hybrid-annuity projects to be offered in the next financial years.

By way of monetisation, the government would not only receive finances but also the operation, maintenance and tolling would be undertaken by the firm that bags the project, saving the O&M cost to the government. 

The ministry of road transport and highways has shortlisted 111 road projects for monetisation.

"The equity IRR (internal rate of return) of the first bundle of highways being auctioned under the toll-operate-transfer (TOT) model would range between 12 per cent and 13 per cent, based on NHAI's initial estimated concession value, an analysis by CRISIL Research shows. The level of bidding intensity will drive the final returns earned by the concessionaire," Crisil Research report had said, last year.

The bundle comprises nine highway stretches in Andhra Pradesh, Odisha and Gujarat.

The Cabinet Committee on Economic Affairs, on August 3rd last year, authorised NHAI to monetise 111 publicly funded projects and a list of 75 operational projects was prepared for potential monetisation using the TOT model. The proceeds from these projects would be utilised for development, and operations & maintenance of highways.

A tentative list of 67 projects has been prepared that would be monetised post the completion of exercise for the first eight contracts.