Highway Monetisation Plan To Take A Hit

Another casualty following the Covid-19 outbreak will be India’s road asset monetisation plan for the ongoing fiscal year which is set to take a hit with investors turning wary. The national highways building authority has extended the fourth round of auction to monetise operational highways to April, as investors adopt a wait-and-watch mode before deciding on long-term investments.

The NHAI had invited bids for its fourth bundle of toll-operate-transfer (TOT) auction in October 2019. The initial plan was to raise at least ₹4,200 crore, but the floor price was eventually brought down to around ₹2,200 crore.

The NHAI was looking to auction at least two bundles of TOT projects in FY20 and raise ₹9,000-10,000 crore. Singapore-based Cube Highways in November emerged the winning bidder for the TOT-3 bundle quoting ₹5,011 crore, and this will now be the only successful bid for the NHAI this financial year.

In 2018, NHAI had raised around ₹9,700 crore through its maiden round of TOT auction, while that for TOT-2, where it was looking to raise ₹5,362 crore, was cancelled in early 2019 as it wanted to rework the package.

The bids for TOT-4 are now scheduled to be opened in mid -April.

Since October, the TOT-4 auction has been postponed four times, with the authority looking to attract more investors. The TOT model was introduced in 2016 to monetise publicly funded highways. Until recently, investors could make a one-time lump-sum payment in return for toll collection rights of 30 years under this model. The Union Cabinet has now tweaked the model, allowing flexibility in the concession period to between 15 and 30 years, in a bid to draw smaller, local investors.