(LiveMint)
A liquidity crunch and concerns over asset quality is expected to weigh on the second attempt by the National Highways Authority of India (NHAI) to privatize operations on toll roads. Industry experts said response to the second round of toll-operate-transfer (TOT) auctions will be subdued compared to the robust first round. The number of bidders is expected to far fewer than the last round, and bid amounts will be a lot less enthusiastic, said the experts, requesting anonymity.
In the second round, private investors can bid for more than 586 kilometres of national highways in Rajasthan, Gujarat, West Bengal and Bihar. The base bid price has been set at Rs 5,362 crore with the winning bidder receiving a concession period of 30 years. When the second lot of TOT was announced in August, the deadline for submitting bids was 5 November. NHAI later extended it to 5 December. Now this week, the deadline has been pushed again to 19 December, which, industry insiders say, is due to NHAI’s struggle to attract investors.
“The initial estimated concession value (IECV, or the base price) is at the higher end when you compare to the quality of assets,” a prominent infrastructure advisor told Mint. “Geographically as well, the roads are spread across the country and players aren’t very comfortable with this. I think we will see a lot less aggressive bids this time. In fact, some may even bid below the base price.”
