NHAI withdraws TOT-4 as it tests recent policy changes for monetising road assets

The National Highways Authority of India (NHAI) has withdrawn its fourth bundle of roads it had offered for monetisation at Rs 2,200 crore under Toll-operate-transfer (TOT), as it tests new models for its asset monetisation programme to take off.

Bids for TOT-4 were invited in November 2019, with a concession value of Rs 4,200 crore, which was later halved to around Rs 2,200 crore, to suit smaller investors.

After multiple postponements caused because of the uncertainty posed by the Covid-19 outbreak, the national highways building authority has finally withdrawn the tender, to tune it to its recent policy change of not disclosing the base price for TOT tenders.

The development comes as NHAI has invited bids for TOT-5, its smallest ever package of around 160 kilometres, without a base price which the concessionaire must meet to bag the road assets.

“We are testing a new model of not disclosing the reserve price, so we have withdrawn TOT-4 to tune it to our policy,” a senior official at NHAI told ET.

TOT-4 comprised road stretches in Jammu & Kashmir, Punjab, Haryana, Rajasthan and Madhya Pradesh, with a cumulative length of 341.6 km.

“Depending on the response on TOT-5, we will see if the road stretches of TOT-4 will remain the same, or some changes will be brought in,” the official said.

Traffic on National highways in the country has still not stabilised amid the pandemic, which could lead to “windfall gains” for concessionaires if bids were accepted basis current traffic density, a second official said.

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The fresh tender will see revised model concession agreement and request for proposal documents. Going forward, for TOT bids, the initial estimated concession value (IECV) or the base price of the projects on offer will be disclosed after technical bids are received and after declaring the selected bidder.

Approved in 2016, TOT is a mode of monetising operating highways where the concessionarie gets toll collection rights against a lump sum amount. This has been the highway ministry’s foolproof method of bringing private investment into the sector.

However, besides TOT-1, which fetched NHAI over Rs 9,000 crore, subsequent bundles have either been withdrawn, or are languishing.

Singapore based Cube Highways, which bagged the TOT-3 bundle in November 2019 for Rs 5,000 crore , has also not made the payment to NHAI, owing to the uncertainty in traffic.

The ministry has, however, now been looking to attract smaller, domestic investors for monetising its operating road assets, and the intent is clear in recent policy changes concerning the TOT model.

In 2019, NHAI got Cabinet approval to vary the concession periods to between 15 and 30 years, while it also downsized the projects to suit smaller investors.



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