NHAI hits bounty as developers pay top Re for projects

A flurry of competitive bidding in highway projects, both under build operate and transfer as well as annuity models, has set the cash registers ringing for the National Highways Authority of India (NHAI).

Projects bid on premium, under which companies offer a premium over bid amount instead of opting for viability gap funding from the government, will fetch the highways body Rs31,352.40 crore from five projects till 2030.

Surface transport minister CP Joshi said, “In five of the recent BOT (toll) projects, the government has received Rs823.53 crore from the private sector participants. This, as per agreement, is set to grow 5% annually over the entire concession period of the respective projects and will fetch us Rs31,352.40 crore.” The bids for these projects were opened between February and April this year.

This premium bidding has opened a new revenue stream for the NHAI, which till now has been earning through toll and fuel cess.

Competitive bidding has also been seen in the case of annuity based projects of late and will help add to the kitty in the long run.

Out of an expected annuity outgo in five recent projects pegged at Rs328 crore by the public-private partnership appraisal committee of the Union finance ministry, the annuity demand that the government actually received was `266.75 crore. The total project cost of the five projects is Rs3,168.37.

An NHAI official said, “Definitely, the savings on this front will significantly boost the NHAI finances. We are still in the process of calculating the long-term impact of the less outgo on the annuity projects.”

Under the annuity model, government retains the toll revenue rights and pays fixed return on investment to the developer, who secures his earnings from the project. In BOT (toll), the developer bears the traffic risk and earns in proportion to that.

NHAI rakes in Rs3,380 crore a year from toll revenue collection and around Rs7,800 crore from cess of Rs2 on petrol and diesel.

Joshi said the government’s 20-km-a-day target will be achievable only three years from now. Work in progress as of March 31 is 10,142 kms against at least 21,000km required to meet that benchmark.