Bidders with access to low-cost debt may gain in TOT bids:ICRA

Rating agency ICRA today said that players with access to low-cost debt will be at an advantage during the auction of toll-operate-transfer (TOT) projects.
The government for the first time plans to monetise 82 operating highways under TOT model with private investment potential of Rs 34,000 crore and the first bundle of nine national highway stretches of 680.64 km has been put out to tender by the NHAI with potential monetisation value of Rs 6,258 crore.
ICRA said a single concessionaire will be selected for all the projects in the bundle on the basis of the highest total upfront concession fee, which is the sum of the 'bid concession fee' for each project in the bundle.

Shubham Jain, Vice-President and Sector Head, Corporate Ratings, said: "...Players with access to low cost debt will be at an advantage. The ability of the participants to generate high equity IRR would critically hinge on the cost of debt."
The total length of the first bundle is 646 km, ICRA said adding, almost 60 per cent of the projects have greater than 10 years of toll collection track record with maximum vintage being 12.40 years, it said.