The highway sector seems to witness investor 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 five firms — IRB Infrastructure, Ashoka Buildcon, Adani Road Transport, Oriental Structural Engineers and PNC Infratech — are understood to have evinced interest in two national highway stretches totalling 132-km under the traditional build-operate-transfer (toll) model where investors do have skin in the game.
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 in February. Three extensions have already been given for submission of final bids, with the latest deadline being July 9. Bids will be opened on July 10.
In its letter to invitation, the NHAI has asked interested parties to submit bid only through the online mode. The bidder who would be offering the highest premium would be chosen as the highest bidder. In case no bidder offers a premium, the bidder seeking the lowest grant (viability gap assistance) shall be awarded with the project. A concessionaire can recoup his investment by collecting toll on the stretch over the concession period.
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 Rs 2.28 lakh crore in February 2020.
The hybrid annuity model (HAM), where the developers have little risk to take, made some headway initially but has lost steam of late.
Sources said while the ministry of road transport and highways is in favour of awarding more and more projects through the engineering procurement and construction mode, in which government pays the entire money, NHAI feels it is worth trying the BOT (Toll) mode since awarding all projects through the EPC mode would further stretch its financials.
ICRA’s Rajeshwar Burla, however, said awarding 3,000 km projects through the BOT (Toll) route would be “extremely challenging” even as he did not rule out smooth sailing of some of them.