NHAI plans to award two bundles of projects under TOT model every quarter in 2023-24

National Highway

The National Highway Authority of India (NHAI), which has been aggressively monetising its road assets, plans to bid out two bundles of projects under the toll-operate-transfer (TOT) model every quarter in 2023-24, multiple senior government officials said.

"Bids for TOT bundles 13 and 14 were invited on June 23 and June 28, (respectively), these bundles will be awarded by the end of September after which bids for bundles 15 and 16 will be invited," a senior executive from the NHAI told Moneycontrol.

He added that the projects to be included under TOT bundles 15 and 16 have been identified and are being finalised.

Another executive from the NHAI said that the company is looking to raise around Rs 7,500 crore from the asset monetisation of TOT bundles 13 and 14.

"The NHAI is targeting to award two bundles of projects through the TOT asset monetisation route every quarter in 2023-24," the second official said.

He added that projects under the TOT bundle 15 are worth around Rs 1,500-2,000 crore, while projects under TOT bundle 16 are worth around Rs 6,000-8,000 crore.

Tepid response

While the NHAI is aggressively inviting bids for road projects under the TOT model, some momentum in awarding projects has been lost.

In February, the NHAI had invited bids for two TOT bundles (11 and 12) to raise a total of Rs 7,000 crore which received lower-than-expected bids.

Only four players have submitted bids for the projects under bundle 12 and only one player submitted a bid for bundle 11.

While the NHAI has not come out with an official statement saying that the tender for the two bundles stands annulled, officials told Moneycontrol, that the tenders have been cancelled.

"The tenders for TOT bundles 11 and 12 have been cancelled due to low participation and low pricing," the first executive said.

He added that bids amounting to around Rs 4,200 crore were received for TOT bundle 12, which was lower than the expected Rs 5,000 crore for the bundle.

Similarly, bids received for TOT bundle 11 came in at Rs 1,200 crore much lower than the expected Rs 1,800 crore, the executive said.

Bids for TOT bundles 13 and 14 will be opened by the end of September. Roads under TOT bundle 13 include the 28-km long Kota Bypass on National Highway 76 and the 81-km long Gwalior-Jhansi on NH75.

Roads under ToT bundle 14 include the 60-km long Delhi-Meerut Expressway on NNH-334 Delhi Meerut Expressway (DME), 51-km long Delhi-Hapur section on NH-24 and part of DME and 79-km long Binjabahal-Teleibani road on NH6.

The NHAI's plans are part of the Ministry of Road Transport and Highways (MoRTH) ambitious target to generate Rs 35,000 crore from asset monetisation in 2023-24 — exceeding the previous target of Rs 32,855 crore.

Monetisation avenues

Currently, MoRTH and NHAI monetise assets under three different modes, including the TOT model, Infrastructure Investment Trust (InvIT) and project-based financing, in order to provide all categories of investors an opportunity to invest in assets pertaining to highways and associated infrastructure.

Infrastructure Investment Trust (InvIT) is an instrument on the pattern of mutual funds, designed to pool money from investors and invest in assets that will provide cash flows over a period of time.

In 2023-24, MoRTH plans to raise Rs 15,000 crore through project-based financing of high-speed corridors by securitising future toll revenues without any guidance from the Authority.

Another Rs 10,000 crore is planned to be raised via InvIT and around Rs 10,000 crore will be raised through bids under the TOT model.

MoRTH has already raised Rs 67,997 crore through various modes of asset monetisation till February 28, 2023, in the last four years.

Around Rs 26,366 crore has been raised through monetisation of 1,614 km till date through the TOT model.

Till date, NHAI has awarded six TOT bundles (ToT-1, 3, 5A1, 5A2, 7 and 9) and raised Rs 26,366 crore from bids invited for 11 TOT bundles.

TOT bundles 2,4,6,8 and 10 were annulled due to bids being lower than the initial estimated concession value (IECV, or Reserve Price) determined by NHAI.