The highway sector seems to again witness investors’ interest in pure public-private partnership (PPP) projects, the share of which in new awards has declined precipitously for nearly a decade and drawn a blank in the last two financial years.
At least four firms — IRB Infrastructure, Adani Group, GR Infraprojects and PNC Infratech — have submitted bids in both the national highway stretches totalling 132-km under the revised, investor-friendly build-operate-transfer (toll) model.
The National Highways Authority of India (NHAI) had invited request for proposals (RFPs) for six-laning of the two stretches in West Bengal – Panagarh to Palsit (67.75) and Palsit to Dankuni (63.83 km) – on the NH-19. Thursday was the last date of submission of the bids. NHAI made a similar attempt last year, but annulled the plan subsequently for want of adequate number of bidders.
The two projects for which bids have been invited are part of the Bharatmala project, under which the NHAI is mandated to build 34,800 km national highway stretches.
From a high of 96% of its all-project awards in 2011-12, NHAI’s project awards through the BOT (toll) route came to a naught in the last two fiscals. Coupled with higher project awards, this resulted in higher reliance on conventional fully state-funded EPC projects and higher accumulation of debt for NHAI which stood at `2.7 lakh crore as in November 2020.
The government recently revised model concession agreement (MCA) for build-operate-transfer (BOT-toll) projects, under which revenue potential of a project would be reassessed in every five years during the concession period as against every 10 years now. Therefore, the concession period will be extended early in the tenure of the contract, adding to certainty of cash flows.
To protect investor interest in BOT-toll projects, the growth of which will help curtail NHAI’s rising debt and find non-government, non-debt resources for highway development, the government will also guarantee to the developers that a BOT-toll project will be awarded only after NHAI taking possession of 90% of the requisite land, similar to HAM projects. In the case of fully government-funded EPC projects, the award is executed, only after 90% of the land is acquired.