Cabinet approves amendments in Toll-Operate-Transfer model

The Cabinet Committee on Economic Affairs (CCEA) approved amendments proposed in the Toll Operate Transfer (TOT) Model by National Highways Authority of India (NHAI).

Briefing reporters after meeting of the Union Cabinet on Wednesday, Finance Minister Nirmala Sitharaman said that Public funded National Highway (NH) projects which are operational and have toll revenue generation history of one year after the Commercial Operations Date (COD) shall be monetized through the TOT Model.

The monetization will be subject to the approval of the competent authority in the Ministry of Road Transport and Highways (MoRTH) or NHAI on a case to case basis.

An official release said that around 75 operational national highway projects have been identified for potential monetization using the TOT model, and bundled into 10 separate bids to attract economics of scale for the private sector.

The corpus generated from the proceeds of such project monetization shall be utilized by the government to meet its fund requirements regarding future development and operations and maintenance of highways in the country. The model would facilitate efficient toll realization through the private sector.

This approval would ensure a wider set of assets for monetization and providing a more attractive model for the investors. The fund generated from such monetization shall be utilized for the development of highways in the country, which would benefit highway users throughout the country.

The approved TOT Model authorized NHAI to monetize public-funded NH projects, such as EPC/BOT (Annuity) projects, which are operational and have a proven toll collection history of at least two years. The approved TOT Model provides for a fixed 30-year concession period. The fund generated from the proceeds of monetization is being utilized by the government to meet its financing requirements regarding the future development of NHs in the country, including their operation and maintenance.

NHAI has already monetized one bundle of projects under TOT Model, generating a revenue of Rs 9681.5 crore for the government. However, the second bundle saw deviation in the market valuation of assets from NHAI's valuation. NHAI has conducted several rounds of discussions with the private sector to reduce uncertainty in the model. The approved amendments in the model will allow more efficient asset monetization through TOT mode, the release said.