National Highway builders bat for BOT annuity model to avoid zero-bid scenario

NEW DELHI: Highway concessionaires have urged the road ministry to use the build-operate-transfer (BOT) annuity model for upcoming projects until key concerns holding back private participation in BOT (toll) projects are resolved.

The National Highways Builders Federation (NHBF) said the current BOT (toll) model exposes private developers to an unacceptably high level of risk, citing recent tenders that received no bids. "BOT projects fundamentally depend on a bankable and balanced risk-sharing structure. Without resolving the core concerns around unfair default classifications for traffic drops, dispute resolution and real-cost delay compensations, there is a strong apprehension that upcoming tenders will continue to face zero-bid scenarios and lack of private participation," the federation said in a submission to the ministry.

ET has seen the letter dated August 18. Under BOT (toll), the private builder collects tolls directly from motorists, while under BOT (annuity), the government pays the builder fixed, regular amounts, reducing the financial risk from a fall in traffic.

Citing recent instances in which no bids were received for several BOT (toll) packages, NHBF said the industry sees an unacceptably high risk profile under the current model concession agreement.