The National Highway Authority of India (NHAI) has proposed the construction of new roads and the operation and maintenance of existing highways, totaling 912.3 km, with an estimated cost of ₹18,884.69 crore under the Built, Operate and Transfer (BOT) toll model in Maharashtra and Gujarat.
However, this initiative has not attracted any bidders for the projects that were tendered in three separate packages. The results of the bidding process, which concluded last week, are viewed as a disappointment for NHAI’s strategy to significantly return to the BOT toll model for highway development.
This comes after the agency opted to decelerate the implementation of the Hybrid Annuity Mode (HAM), a risk-free approach that has garnered substantial interest from road operators since its inception in 2015. In an effort to enhance the appeal of the BOT toll format to potential bidders, NHAI even revised the model concession agreement to alleviate the risks encountered by private investors. Despite extending the bid timeline several times after issuing tenders for the three packages over a year ago, NHAI has yet to receive any proposals from bidders.
The first project entails the construction of a 105.8 km six-lane, access-controlled highway along the Sanchore-Tharad-Deesa-Mehsana-Ahmedabad corridor, with a budget of ₹3,739.69 crore. The second package includes the construction of a 152 km six-lane access-controlled highway between Adgaon and Ahilyanagar, along with the operation and maintenance of 133.5 km of existing highway between Nashik and Ahilyanagar in Maharashtra, at a cost of ₹6,890.55 crore.
The third package consists of the construction of a 222 km six-lane access-controlled highway from Ahilyanagar to Hasapur, as well as the operation and maintenance of 299 km of existing highway between Ahilyanagar Bypass, Walunj Junction, Chapadgaon, Tembhurni, Solapur, and Akkalkot, with an estimated expenditure of ₹8,254.45 crore.
NHAI’s recent initiative to launch three BOT toll projects failed to attract any bidders, despite the risk mitigation strategies implemented based on NHAI’s own assessments and viewpoints,” stated Praveen Sethia, Founder and Director of Infrastructure Advisors based in Mumbai. “The complete lack of participation clearly signifies that certain elements need to be aligned with realistic market expectations. Moving forward, adopting a more measured and consultative strategy could assist in closing this gap,” Sethia further remarked. However, highway developers indicated that they had insufficient time to conduct thorough due diligence on the projects, as NHAI only provided clarifications to their inquiries in January.
Under the BOT model, a private developer is tasked with financing, constructing, and operating a highway project, with the ability to recoup the investment through user charges or tolls over a designated period. The BOT (toll) model serves as a crucial tool employed by the government for the development of extensive highway projects.
However, it has gradually lost popularity over the years as developers encountered obstacles such as delays in land acquisition, environmental approvals, and fluctuations in traffic that affect toll revenues, among other issues.
