In an attempt to woo private investors, the road transport ministry has floated a cabinet note to bring down concession period for highways offered under Toll Operate Transfer model to 15 years from the current period of 30 years, CNBC-TV18 has learnt.

"This proposal is expected to help investors in better projections of their returns. This also brings some element of certainty as private players will be able to better assess the investment ecosystem for the next 10-15 years as compared to 30 years," one of the people aware of the development said.

The TOT model was approved by the cabinet on August 2016. The model is for monetisation of those public-funded national highways which are operational and are generating toll revenues for at least two years after commercial operations.

The road transport ministry has also floated another cabinet note to reduce the toll assessment period for national Highways to one year from the current period of two years, CNBC-TV18 has learnt. This denotes that if the proposal goes through, the model will be able to include the public-funded national highways which are operational and generating toll revenues for at least one year after commercial operations.

"Currently, we are setting the reserve price as per the assessment of toll collected over a period of two years. Now, the proposal is for reducing this period to one," another person aware of the matter said.

While the first TOT bundle comprising nine project stretches aggregating to a length of 680 km exceeded the expectations of the government with Macquarie winning the bid at Rs 9,691 crore as against the expectation of Rs 6,258 crore, the second TOT bundle of 584 km failed as the bids received were lower than the reserve price.

Recently, the National Highways Authority of India (NHAI) organised a roadshow for the third phase of TOT project for prospective bidders. It comprises of nine stretches traversing a total length of nearly 566 kms in Uttar Pradesh, Bihar, Jharkhand and Tamil Nadu. The third TOT bundle, with a reserve price of Rs 4,995.48 crore, has garnered interest from 27 companies but the financial bids are yet to be known.

As per the current terms of TOT projects or PPP (public-private-partnership), the right of collection and appropriation is assigned for a pre-determined concession period (30 years) to concessionaires (Developers/Investors) against upfront payment of a lump sum amount to NHAI. Operation and maintenance obligation of such projects is also with the concessionaire until the completion of the concession period.

Around 75 operational national highway projects completed under public funding have been preliminarily identified for potential monetisation using the TOT model but poor show in the second TOT has forced the ministry to review some aspects of the model.

This model was designed to provide an efficient operation and maintenance framework, reduced the involvement of NHAI in projects post-construction and to help the government in meeting its fund requirements regarding future development and operation and maintenance of highways in the country.

First Published:Sept 13, 2019 3:41 PM IST