Cube Highways Wins NHAI’s Third TOT Bundle Of 566.27 Km With ₹5,011 Crore Bid

Road developer Cube Highways has emerged as the highest bidder for the third bundle of the toll-operate-transfer (TOT) projects offered by the National Highways Authority of India (NHAI) by quoting ₹ 5,011-crore fee, Business Standard reported.

Cube Highways, which is backed by global infrastructure fund I Squared Capital and the International Finance Corp. (IFC), quoted ₹5,011 crore to the government for a 30-year concession period. This is against the initial estimated concession value (IECV), or reserve price, of ₹4,995.48 crore set by the NHAI for the road bundle.

The National investment and Infrastructure Fund (NIIF) quoted ₹ 4,230 crore while Mumbai-based IRB quoted ₹ 3,510 crore.

NHAI had invited bids for the third bundle on June 13 this year for nine highway stretches totalling 566.27 km in Uttar Pradesh, Bihar, Jharkhand, and Tamil Nadu.

The Union Cabinet in 2016 had authorised NHAI to monetise public funded National Highway projects. 75 operational NH projects totalling 4500 km and completed under public funding had been identified for potential monetisation using the Toll-Operate-Transfer (TOT) model TOT Model.

TOT model was developed with the aim to encourage private participation in the highways sector.

Under the TOT model , concessionaire paying a one-time concession fee upfront (lump sum), which then enables the concessionaire to operate and toll the project stretch for the pre-determined 30 year concession period. This model is applicable to EPC and BOT (Annuity) highway projects, which have completed at least 2 years since date of completion.

The model seeks to addresses the risks associated with such a long concession contract and there are multiple provisions in the model concession agreement, which are designed to take care of eventualities like roadway expansion, high toll traffic variation etc to ensure that concessionaires are not exposed to undue risks.

In April last year (2018), NHAI signed a 30 year concession agreement with Macquarie Infrastructure and Real Assets (MIRA), world’s largest infrastructure fund manager, to monetise a bundle of nine fully operational highways involving 648 km in Andhra Pradesh and Gujarat. This was the first concession agreement signed under the Toll-Operate-Transfer (TOT) model . MIRA by making an upfront payment of ₹ 9681.50 crores in return for maintenance of the highways and the 30 year toll collection rights.

As against the NHAI concession value of ₹ 6258 crores MIRA bid ₹ 9681.50 crores representing a premium of 55%. It was also 30% higher than the next highest bid. Brookfield Asset Management, IRB Infrastructure and Roadis-NIIF also participated in the bid.

Buoyed by the huge over-subscription of the maiden bundle of 9 highway projects under TOT model , the government went in for monetisation of second tranche of road projects totalling 586 kilometres of national highways in Rajasthan, Gujarat, West Bengal and Bihar. The base bid price was set at ₹ 5,362 crore with the winning bidder receiving a concession period of 30 years. The second bundle however was cancelled last year after the response was muted and the bids were below the base price.