The National Highways Authority of India (NHAI) is contemplating a temporary hiatus in initiating new Toll-Operate-Transfer (TOT) projects following the ongoing evaluation of bids for the 13th and 14th bundles. Market conditions, with limited market interest, are cited as a determining factor for the potential pause.
An official, speaking on condition of anonymity, acknowledged the current lack of market appetite for additional TOT bundles. The NHAI has faced challenges in the past, leading to the cancellation of certain TOT offerings due to bids falling significantly below the authority’s estimates. The 12th bundle, despite receiving four bids, was canceled as bids were substantially below expectations. Similarly, the 11th bundle received only one bid, prompting its cancellation.
The NHAI had removed the base price for bid invitations after the fourth round of TOT, relying on comparisons with the Initial Estimated Concession Value (IECV) determined by a committee appointed by NHAI. The reserve price for canceled bids had fallen below the IECV.
TOT contracts involve a 20-year concession period during which the Concessionaire manages and operates the specified highway stretch, retaining the right to collect user fees in return. This model is part of the Ministry of Road Transport and Highways’ monetization plan, aiming to raise Rs 45,000 crore. Of this, Rs 30,000 crore is anticipated from TOT projects, and the remaining Rs 15,000 crore from Infrastructure Investment Trusts (InvITs) to be offered by NHAI. InvITs enable investors to contribute funds, with dividends derived from the income generated by the assets.
The Cabinet granted NHAI the authority to monetize operational, toll-revenue-generating national highway projects through TOT in 2016. The NHAI periodically issues requests for proposals to award contracts for tolling, operation, and maintenance of various National Highway stretches under the TOT framework.