The National Highways Authority of India (NHAI) has awarded Toll, Operate and Transfer (TOT) projects of a combined length of 273 km for Rs 9,384 crores to successful bidders, under the TOT bundles 13 and 14, after a delay of around three months.
All projects awarded by the NHAI have been clubbed into two categories called Bundle 13 and Bundle 14 and were expected to be awarded in September 2023.
"State elections coupled with a slower government approvals for winning bidders led to delays in awarding the projects," a senior NHAI executive told Moneycontrol.
The NHAI, which has been aggressively monetising its road assets, had planned to bid out two bundles of projects under the toll-operate-transfer (TOT) model every quarter in 2023-24.
But the highway authority has been slow in awarding projects in 2023-24, after scrapping two rounds of TOT bundles--TOT Bundle 11 and TOT Bundle 12--due to sub-par bids in August and inviting new bids of the bundles in October, awarding of TOT Bundle 13 and TOT Bundle 14 was also delayed.
"There were four bids for the 12th bundle including a Rs 4,200-crore bid but the authority has decided to cancel it as the amount of the bids received was way below the authority's estimates," a senior NHAI official had said.
The 11th bundle received only one bid and therefore had to be canceled. Bids for these bundles were invited back in September and awarded in October.
NHAI awarded TOT bundles 11 and 12 for a combined length of 400 km for Rs 6,584 crore. The two bundles (11 & 12) consisted of Allahabad Bypass on NH19 in Uttar Pradesh and Lalitpur - Sagar - Lakhnadon section in the state of Uttar Pradesh and Madhya Pradesh. respectively.
The combined value of the four TOT bundles awarded in FY 2023-24 is around Rs 15,968 crore, according to a statement from MoRTH on December 18.
So far in 2023, till October 31, MoRTH has spent around Rs 1,66,157 crore as capex, and constructed around 4,450 km of national highways but has awarded projects for only 2,595 km.
Despite the slowdown in awarding projects, the government has managed to raise more than its expected Rs 7,500 crore from TOT bundles 13 and 14.
TOT bundle 14, consists of the Delhi-Meerut Expressway including the Delhi-Hapur section of NH-9 in the states of Delhi and Uttar Pradesh, as well as Binjabahal to Teliebani section of NH-6 in the state of Odisha, has been awarded to Cube Highways and Infrastructure Pte Ltd for Rs 7,701 crores.
The TOT bundle 13 includes Kota Bypass and Stay Bridge on NH-76 in Rajasthan, as well as the Gwalior-Jhansi section of NH-75 in the states of Madhya Pradesh and Uttar Pradesh has been awarded to IRB Infrastructure Trust for Rs. 1,683 crore.
The concession period of TOT bundles is for 20 years, in which concessionaires would be required to maintain and operate the stretch.
In lieu of this, Concessionaire will collect and retain user fee for these stretches in accordance with prescribed fee rates under NH Fee Rules.
The TOT model has been developed to encourage private participation in the highway sector, the statement said. In a TOT bundle, two to three or more highways are clubbed together to be offered to the investors for a long term operation and maintenance contract.
Under the monetization plan, the Ministry of Road Transport and Highways will offer projects under TOT contracts and Infrastructure Investment Trusts (InvITs) to be offered by the NHAI. InvITs are assets where investors put in money and income generated from such assets is paid as dividend.
Awarding projects under the Bharatmala Pariyojana scheme has slowed down in the last few months after the Comptroller and Auditor General (CAG) of India found instances of irregularities in the awarding of projects in August.
In its report on the implementation of Phase-I of Bharatmala Pariyojana, the auditor has found deficiencies in the appraisal and approval mechanism proposed to the Cabinet Committee on Economic Affairs (CCEA) and also flagged huge cost overruns in many of the high-cost Engineering Procurement and Construction (EPC) projects, including the construction of the Dwarka Expressway project and Delhi-Vadodara Expressway.
ICRA Research expects the award of road projects to fall by 30 percent in FY24 in the run-up to the general elections. About 9,000 km of highways may be awarded in FY24, compared to over 12,000 km in FY23, ICRA said.
The expected decline is similar to the trend ahead of the 2019 general elections, when about 5,500 km of road projects were awarded, compared with over 7,000 km in 2018, ICRA said.
Target for FY23 missed
ICRA forecasts a 16-21 percent on-year increase in road execution activity to 12,000-12,500 km in FY24, compared with the government’s target of 14,000 km. The Centre constructed about 10,993 km of national highways in FY23, missing its target of 12,500 km.
The ministry has missed its highway construction target for the past two years.
The building of national highways peaked during the pandemic-hit FY21, when lockdowns helped accelerate construction, touching an all-time high of 37 km a day, leading to a record 13,327 km of highways being built.
The road ministry has initially planned to construct 14,600 km of highways at 40 km per day in FY22. The goal was lowered to 12,000 km and eventually, 10,457 km of roads were built.
In FY23, the target was set at 12,500 km, even though road transport and highways minister Nitin Gadkari had suggested that 18,000 km of highway construction at a daily rate of 50 km could be considered.
Budget 2023-24
MoRTH had received a push with the Union Budget raising the allocation by 36 percent to around Rs 2.7 lakh crore for 2023-24.
This is a nearly 10 percent jump over the budgetary allocation of Rs 1.99 lakh crore made in the budget for 2022-23.
Higher budgetary allocations were necessary to help the ministry meet the 25,000-km road development target announced by the government in the 2022-23 budget, amidst rising interest expenses and increasing land acquisition costs.
The National Highways Authority of India (NHAI) and National Highways and Infrastructure Development Corporation Ltd (NHIDCL) are primarily responsible for the construction of national highways and expressways in India.
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