An official source told Moneycontrol that since the TOT process is being done for the first time, bidders have lot of queries including physical condition of the roads and fear of making upfront payment
National Highways Authority of India (NHAI), the government’s arm for constructing national highways, has decided to extend last date of bidding for first tranche under Toll – Operate – Transfer (TOT) model till February 8, 2018. The move comes after bidders showed apprehensions about physical condition of highway projects.
The organisation had earlier invited bids till January 9, 2018 for nine highway projects spread across the states of Andhra Pradesh and Gujarat. The total stretch for the highway monetisation process is approximately 680 kilometer and will fetch Rs 6,258 crore.
An official source told Moneycontrol that since the monetisation process is being done for the first time, bidders have a lot of queries including about the physical condition of the roads and fear of making upfront payment.
“Many queries have come regarding physical condition of roads,” said an official, on condition of anonymity. He said that most of the bidders have “operational queries”.
A report also suggested that as long term loans from financial institutions are available only for 20 to 25 years, the concession period of 30 years could lead to bidding by only few, but strong, auction-goers. This could also be another reason for the organisation to extend the date.
“Since, it was the first time for TOT, they (bidders) are also concerned about paying upfront money to us,” the official from NHAI said. “Once the payment is made by them, money will be gone from their hand”.
Another senior official said that NHAI wanted “more investors” to come forward and thus they have extended the time.
“We are still interacting with the bidders and solving their queries. We want more people to bid,” said the official quoted above, adding, “We are expecting many overseas investors”.
Under the TOT process of highway monetisation, stretch of (already built) highway is given to a concessionaire for a specific time frame (30 years in this case) to collect toll across the auctioned stretch against an upfront payment or a lump-sum amount to the government. The concessionaire will be responsible for the operation and maintenance of the national highways during the entire time frame.
The official said that the first tranche is to “test water” for this process, following which a policy regarding the same could also be formulated.
“Depending on the results of first tranche, for sure, and may be the second tranche, we may come out with a policy related to TOT bidding,” the official said.NHAI chairman, Deepak Kumar, has previously said that future bidding processes could be fine-tuned taking cognizance from the result of first bidding process.