Auction to lease out 11 NHs under toll-operate-transfer in mid-September

NEW DELHI: The road transport and highways ministry is set to invite bids for 11 national highways next month under its ‘toll-operate-transfer’ (TOT) model as it seeks to raise Rs 6,500 crore, a top government official said. The auction will involve seven highways running across Andhra Pradesh and four in Gujarat. The total length of these highways is just under 700 km.

“The bidding will begin in mid-September and we plan to wind up the process in a couple of months,” the official told ET on condition of anonymity.

“More such projects would be lined up for bidding early next year.” Under the TOT model, pension funds and PE firms are allowed to lease government-owned national highways for 30 years for an upfront payment. The lessee, in turn, gets the right to collect the toll, operate, manage and maintain the highway stretch.

The National Highways Authority of India (NHAI) is likely to provide a risk cover to the lessee for any unforeseen circumstances such as a rapid fall in toll collection and any structural or engineering fault on the highway.

Road transport and highways minister Nitin Gadkari told the Lok Sabha earlier this month that international investors such as ADIA, GIC Pte, Temasek, Hastings Funds Management, Keppel Infrastructure Fund Management, Morgan Stanley Infra, Equirus Capital and JP Morgan Asset Management were keen to invest in India under TOT model.

ET View: Creating a new asset class
It makes perfect sense to monetise toll collections upfront, and plough back funds for reinvestment in highway projects. In parallel, we need to leverage IT to transparently and efficiently boost toll payments in digital mode. Monetising infrastructure would amount to a new asset class for long-term investors like pension funds and sovereign wealth funds. It has the potential to shore up investment for infrastructure, and also provide attractive returns — with low attendant risks — for investors.