MoRTH revises BOT model concession agreement to attract private players

The revised model concession agreement includes buyback, revenue support and traffic-risk sharing measures aimed at making BOT highway projects more bankable.

The Ministry of Road Transport and Highways (MoRTH) has revised the model concession agreement for build-operate-transfer national highway projects to encourage greater participation of the private sector players. 

The revised document includes a buyback option, revenue support to concessionaires and traffic-risk sharing between the concessionaire and the government, with an aim to make BOT projects more bankable, risk-free and attractive for the private sector.

  The ministry in a memorandum said the revised MCA has been prepared following the recommendations of the inter-ministerial committee formed to address the challenges being faced by various stakeholders in BOT projects.

  The revised MCA includes provision of traffic-risk sharing through concession-period adjustment as traffic underperformance beyond the initial support period can result in an extension of the concession period, while significant outperformance can reduce it.

 

  Last month , state-owned NHAI had made public the list of 54 projects with a total capital cost of Rs 1.8 lakh crore and spanning 2442 km that it will award in 2026-27.

  In May this year, MoRTH has allowed big funds and large investors to bid for build-operate-transfer (BOT) projects after some projects failed to attract private investments due to concerns over contract terms.

  Earlier, big funds were allowed to bid only for toll, operate and transfer (TOT) projects.

  The ministry has allowed sovereign wealth funds, infrastructure funds and pension funds, and private equity to bid for BOT projects under the public-private-partnership (PPP) model.

  National Highways are developed under different modes of execution, including BOT or toll, BOT (annuity), Engineering, Procurement and Construction (EPC), InvIT and Hybrid Annuity (HAM) model.

  Under the BOT mode, the government provides a concession period of 20-30 years to finance, build and operate highway projects.