New Delhi: The 135-km Eastern Peripheral Expressway built to decongest Delhi, the longest highway tunnel in Chenani-Nashri, Jammu and Kashmir, and the 326-km Hyderabad-Bengaluru stretch are among the 104 national highways that the government has identified to monetise between 2022 and 2025 under the National Monetisation Pipeline.
Spanning 26,700 km, they constitute around 22 per cent of the total national highways (NHs) — estimated to be about 1,21,155 km, excluding the network operated by the private sector under Build-Operate-Transfer (Toll)-based PPP concessions.
According to the asset pipeline drawn up by the federal think tank Niti Aayog, the total indicative monetisation value of road assets listed is estimated at Rs 1.6 lakh crore. The road ministry will monetise the completed NH stretches through two modes — Toll Operate Transfer (TOT), which is in use since 2018, and Infrastructure Investment Funds (InvIT).
However, the monetisation exercise undertaken so far by the ministry through TOT mode — where completed, public funded road projects are auctioned to a private developer for a period of 30 years in lieu of an upfront payment — has received a mixed response from private sector investors.
Under the TOT model, in lieu of upfront payment, the private investor gets the right over toll and operates and maintains the NH for the entire duration of the concession period.
According to the asset pipeline for the road sector drawn up by Niti Aayog, both existing operational NH assets and new NH roads, which will be constructed and operationalised before 2025 have been considered.
“All the road assets chosen by the Union Ministry of Road Transport and Highways are four lane and above and public funded, where the NHAI reserves the tolling rights,” a senior NHAI official told ThePrint.
The TOT model
The National Highways Authority of India (NHAI) has so far taken out five ‘packages’ of completed highway projects for monetisation through the TOT mode.
The NHAI had received Rs 9,681 crore for the first package, comprising nine projects totalling 681 km. This was 1.5 times higher than the base price fixed by it. However, the NHAI had to withdraw the second and fourth package due to a lacklustre response from investors.
The base price fixed for the second tranche of projects spanning 586 km was Rs 5,632 crore while for the fourth package totalling 341.6 km, the concession value was Rs 4,200 crore. Failing to get a response, NHAI reduced the concession value for the fourth tranche to Rs 2,200 crore, but eventually had to annul the bid.
The third package of TOT was awarded to Cube Highways, a Singapore-based bidder. It had quoted a bid price of Rs 5,011 crore.
The fifth package of highway projects auctioned in February through TOT also received bids to the tune of Rs 2,252 crore against the reserve price of Rs 1,621 crore. Adani Enterprise and DP Jain & Company Infrastructure were the highest bidders for the fifth package, which was divided into two parts.
First tranche of NHAI InvIT expected to be done by 2022
The NHAI InvIT has been set up with the objective of monetising completed and operational NH projects through alternative sources such as capital markets and diversification of its investor base.
A new entity wholly-owned by the NHAI, the National Highways Infra Investment Managers Private Limited has been incorporated to act as the investment manager under the proposed InvIT transaction.
The road ministry expects to complete the first tranche of the NHAI InvIT transactions by the second or third quarters of the 2022 fiscal year, subject to market conditions and stabilisation of toll revenues in the wake of the Covid pandemic. This tranche is expected to consist of 586 km of NH assets in Rajasthan, Gujarat, West Bengal and Bihar.
The indicative value of the NHAI InvIT fund raised from the current tranche is about Rs 5,000 crore.
(Edited by Manasa Mohan)