Infra stocks spurt after Cabinet OKs amendments in ToT Model

Shares of infrastructure developers were in demand after the Union Cabinet on Wednesday approved amendments in the Toll-Operate-Transfer road monetization model of the National Highways Authority of India.

HCC (up 19.9%), IRB Infrastructure Developers (up 11.05%), Man Infraconstruction (up 10.72%), KNR Constructions (up 6.4%), Patel Engineering (up 4.41%), Sadbhav Infrastructure (up 4.35%), Dilip Buildcon (up 3.74%), Ashoka Buildcon (up 3.67%), Sadbhav Engineering (up 3.58%) and NCC (up 3.44%) soared higher.

Under Toll-Operate-Transfer (TOT) model, the highest bidder wins the rights to operate and maintain operating roads for 30 years, with rights to toll revenues from these road assets.

The Cabinet has now allowed NHAI to monetize under TOT all those public-funded national highway projects which are operational and have toll revenue generation history of one year after the Commercial Operations Date. Earlier, the highways had to be operational for at least two years to enable participation in TOT.

Around 75 operational National Highway (NH) 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 proceeds of such project monetization shall be utilized by the Government to meet its fund requirements regarding future development and O&M of highways in the country. The Model would facilitate efficient toll realization through private sector.

The monetization will be subject to approval of the competent authority in ministry of road transport and highways.

NHAI has already monetized one bundle of projects under TOT Model, generating a revenue of Rs 9681.50 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.

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