Dozen firms show interest in nine highway projects under toll-operate-transfer.

Around a dozen firms, both domestic and foreign, including Macquarie, Brookfield, Roadis, Adani and IRB Infrastructure, have evinced interest in the nine highway stretches that the National Highways Authority of India (NHAI) has offered under the toll-operate-transfer (TOT) model aiming to garner at least Rs. 4,995 crore upfront.

Sources said Cube Highway, L&T, NIIF, MEP Infrastructure and Autostarde have also bought request for proposal (RFP) documents and attended pre-bid meetings with the authority. However, it could not be verified with individual companies.

Under the TOT model, publicly funded operational highway projects are given on long-term lease basis to domestic and foreign “patient capital” investors. Successful bidders are required to pay the lease amount upfront and can recoup their investments and returns by collecting toll over the lease tenure of 30 years.

For the first time in October 2017, NHAI had invited bids for such public-funded highway projects. In the first tranche, nine highway projects were offered and Australia-based Macquarie bagged them quoting Rs. 9,681.5 crore for the total length of 680.5 km against the floor price of Rs. 6,258 crore.

NHAI’s second TOT attempt, however, failed. Against its floor price of Rs. 5,632 crore for eight highway projects with a total length of 586.55 km, the highest bidder (Cube Highways) quoted only Rs. 4,612 crore, forcing the authority to abandon the plan. Asset recycling of this kind is being tested in India, following many global precedents.

In the third round, the authority has invited bids for nine stretches, measuring 566.27 km, spreads across Uttar Pradesh, Bihar, Jharkhand and Tamil Nadu. Invitation for RFP was issued on June 13, 2019. Interested parties are required to submit bids by September 11, 2019. Within a month, NHAI is supposed to declare qualified bidders. Financial bids are to be opened in the first week of October. LoA would be issued within December 11, 2019.

“Even if 4-5 serious companies bid for a tranche, it is considered successful,” said a source. More often than not, two companies form a consortium to bid for a tranche.

In the first tranche, Macquarie and Ashoka Buildcon had bid together while Brookfield bid it solo. IRB Infrastructure and Autostarde bid in a consortium. Roadis and NIIF also joined hands in the first tranche.

The fourth tranche is also likely to come in the current fiscal. In the fourth tranche 404 km is on offer and the authority is likely to keep the reserve price at Rs. 4,056 crore. RFP for the fourth tranche is likely to be issued by September-end. Tolls are currently being collected by NHA in all these stretches.

The Cabinet Committee on Economic Affairs had in 2016 allowed NHAI to monetise 75 highway projects through the TOT model. Crisil had earlier estimated that NHAI can raise about Rs. 60,000 crore through monetisation of these highway stretches.

THE FINANCIAL EXPRESS