Road monetisation model to be adopted for inland waterways project

After the success of road monetisation contracts, those under the Union government’s ambitious inland waterways project would soon be offered via tender for operation and maintenance to the private sector, on a long-term basis.

After being built by the central government, the idea is to give on tender for 30 years, to also build warehousing and logistics facilities, fuel bunkering, etc. 
 

The first operate-maintain-transfer (OMT) contract would be the Varanasi multi-modal project on National Waterway (NW)-1, a senior official at the Inland Waterways Authority of India (IWAI) told Business Standard.

The Request for Qualification or preliminary bids for the contract would be finalised within a month.

“The private company that aims to bid for such contracts should have executed similar contracts worth at least Rs 2.5 billion in the past five years,” the official said.
 

Private participation can also come via joint ventures, with up to three partners.

The government would acquire the land required for warehousing and logistics facilities. And, build trunk or primary infrastructure for the multi-modal projects. The remaining work has to be by the private entity.

These contracts are part of the broader Jal Marg Vikas Project approved by the Union Cabinet in January this year. The scheme entails capacity augmentation for navigation on NW-1 at an estimated Rs 53.7 billion, with technical assistance and investment support from the World Bank. The project is expected to be completed by March 2023.
 

The multi-modal hub at Varanasi in Uttar Pradesh would be the first such OMT contract. It would be replicated at other inland waterways.

According to a shipping ministry official, international players are free to participate in the bidding.

With these tenders, IWAI would be able to raise funds for projects in the future, the same way National Highways Authority of India did from its road monetisation drive earlier this year. The Macquarie group, in partnership with Ashoka Buildcon, bagged a Toll, Operate, Transfer (TOT) contract, for nine national highways with a total length of about 700 km, at Rs 96.8 billion.

Funds generated from monetisation of highways would be used for new infrastructure programmes such as Bharatmala. The government expects to raise around Rs 2 trillion through TOT in the next five years. The first bundle of projects cover nine stretches in Andhra Pradesh and Gujarat.

WHAT IS the TOT MODEL

• Under the TOT model, the concessionaire pays a one-time fee upfront and operates the 
• toll for 30 years
• This model is applicable to engineering, procurement and construction and the built, operate and transfer (annuity) highway projects
• The right to collect toll on some national highway stretches built through public funding is auctioned and assigned to 
• the concessionaire
• The concessionaire is also responsible for the operation and maintenance of the roads during the tenure