In a quick move in an asset monetisation plan, the government will soon offer 550 km of roads to private companies to operate and collect tolls.
Under the toll-operate-transfer (TOT) plan, the National Highway Authority of India (NHAI) will seek bids for the roads in Tamil Nadu, Uttar Pradesh, Bihar and Jharkhand next month, aiming to raise about Rs 5,000 crore.
The first round of TOT auctions for 680 km of highways ended in February 2018.
The government is pursuing the TOT model to help raise resources in the sector and attract private funding, which has remained subdued.
Besides, the TOT model came into effect in 2016 to monetise publicly funded highways. Under the programme, investors make a one-time lump sum payment in return for long-term toll collection rights. The current TOT offers a 30-year lease.
After the first round of auction, one of the bidders Macquarie Group, won and paid around Rs 9,618 crore against NHAI’s estimated value of Rs 6,258 crore. While Brookfield Asset Management, IRB Infrastructure and Roadis-National Investment and Infrastructure Fund were the other bidding participants.
However, the second round which was held in February 2019, was cancelled due to poor response from the bidders. Cube Highways, a toll road operator, bid Rs 4,612 crore against the base price of Rs 5,362 crore.
“The expectations of bidders and the government in the second round did not match,” the official said. The government is coming out with new stretches and a decision will be taken later as to how to re-bundle TOT round 2, the official further added.
Therefore, the NHAI has made several changes to the TOT framework to make it profitable for the private sector and awaits for the third round to be held in a positive manner.