NHAI to halve TOT bids to Rs 3,000 cr

National Highways Authority of India's (NHAI) plans to scale down Toll-Operate-Transfer (TOT) package and may even even tweak contract conditions to accommodate market participants.

The move comes after the industry players demanded the government to come out with smaller packages to allow more industry players to participate.

"Later this week, the first round of TOT bid submission will be through. Thereafter, we have plans to float second auction tender of a smaller size, but this will be floated during this fiscal year itself," a senior NHAI official told DNA Money.

Under the TOT model, tolled highways operated for over two years by NHAI are being auctioned for an upfront payment to investors, who will collect the toll and operate the road asset for a specified duration.

The size of second package is expected to be around Rs 3,000 crore as against Rs 6,258 crore in the first one. The following bid will have only five of highway assets so that even the domestic players can participate.

"Our idea is to have the initial two bids on an experimental basis to test the waters and get opinions from the industry. Depending upon the market feedback, we would incorporate viable modifications from the third package," said the NHAI official.

"The subsequent bids have almost been finalised, but yet to be floated by NHAI," said a source. The next couple of packages would have road assets from Andhra Pradesh, Tamil Nadu, Bihar and Uttar Pradesh.

The size as well as the contract period will be less, possibly around 20 years.

"The way TOT has been crafted, the government's intention is clear that it wants only those with deep pockets to participate, particularly overseas players. Even if they reduce the package size, the amount continues to remain big for most of the road developers in India, this would only mean the top league of players getting into a partnership with foreign funds," said the source.

In a few years, NHAI would come up with a total of eight to nine TOT bids.

The ongoing TOT package has seen interest from PSP Investments (Canadian Pension Fund), Brookfield, Cube Highways and Infrastructure, Abu Dhabi Investment Authority, Macquarie, etc. Domestic players, including IRB Infrastructure Developers, Ashoka Builcon, IL&FS Transportation Networks, Tata Realty and Infrastructure and GMR Group have shown interest.

The last day to submit a quote for the maiden TOT bid is February 22, and the bids would be opened the subsequent day.

EASING NORMS

• The size as well as the contract period will be less, possibly around 20 years
   
• In a few years, NHAI would come up with a total of eight to nine TOT bids
   
• The next couple of packages would have road assets from Andhra Pradesh, Tamil Nadu, Bihar and Uttar Pradesh