(FE)
In a move that could fetch the government upwards of R50,000 crore, a host of pension funds, sovereign funds and private equity funds may invest in the 75 road projects to be bid out in the toll-operate-transfer (TOT ) mode. Players such as Macquarie, Abu Dhabi Investment Authority, Canada Pension Fund, Brookfield Asset Management, and IDFC Alternatives in India are understood to have shown keen interest in these projects. National Highways Authority of India (NHAI) officials are believed to have indicated to players the first lot of projects could be up for bidding as early as April.
The TOT model will allow the government to lease out 75 operational projects constructed by the NHAI or a concessionaire with a combined length of over 4,300 km to private players for a concession period ranging between 25 years and 30 years.
NHAI can securitise the toll receivables by collecting an upfront concession fee. Funds are eyeing these ventures as a good investment opportunity given the risks are minimal. MK Sinha, managing partner and chief executive officer, IDFC Alternatives, told FE that TOT ventures are probably the best way to attract foreign and private capital chasing yield investments without taking on any construction and development risk. “Taking construction and development risks in road construction has not worked well for the private sector and has also resulted in large claims from NHAI on account of various delays,” Sinha pointed out.
