BOT concession period rejig after periodic traffic density review

NEW DELHI: The government will periodically review traffic density on roads and tweak concession periods accordingly for build-operate-transfer (BOT) projects, a move that will reduce operational risks for developers.

In such projects, private sector developers build roads using their funds, operate and then transfer them to the government after a specified period. The government is reworking guidelines for BOT projects to make them more investor friendly as it looks to revive private investment in the sector.

Investors have been wary of putting money in BOT projects, given the high risk factors, a major one being changing traffic flows on account of new roads that come up nearby.


Key issues related to the BOT model were resolved at a recent meeting between representatives from the finance and road ministries, the National Highways Authority of India and Niti Aayog, an official familiar with the developments told ET.

“We expect the BOT document to be finalised soon,” the official said. With the proposed changes, the government is trying to bring in a level playing field for investors, who bear most of the risks, including land acquisition and forecasting traffic density.

“It’s been proposed that traffic flow be reviewed every five to 10 years because there is always the possibility of new roads coming up in the vicinity,” said the official. “If we see that the traffic density has breached a certain band, the concession period will be curtailed accordingly.”

NHAI was looking to address traffic density issues in order to revive the BOT model, ETreported on June 14, 2019.

Apart from changes in the termination payment clause, concessionaires wanted a mechanism to address traffic fluctuations, a senior NHAI official told ET then. While the ministry of road transport and highways has been making efforts to revive the model, it hasn’t seen much success.

NHAI was unable to bid out about 700 km of road projects in the BOT mode in the current financial year amid a tepid response from investors, ET reported on December 13.

In September, NHAI said it had identified about 950 km of road stretches worth over Rs 30,000 crore to be offered on BOT basis and had invited pre-qualification bids to gauge investor sentiment. The bid submission deadline has been extended several times since then as the model is under review.