The Center is likely to come out with its revised concession agreement for the Build Operate Transfer (BOT) model by the end of this month. The move will remove a major hurdle in the government's drive to attract private capital for construction of national highways, Union Highways Secretary Anurag Jain said.
Speaking at an event organized by public sector lender REC Limited in New Delhi, Jain said the Center has resolved most of the issues related to the existing interpretation of the BOT concession agreement. Inter-ministerial consultations are currently taking place on the renewed agreement.
Jain added that the amended document is expected to come into effect within a month. BOT is the highway construction model where a private entity, with its own investments, builds and maintains a road for a specified period of time and receives toll fees from the authority.
The decision to revise the BOT concession agreement comes amid tepid interest from private entities in the asset monetization model. Factors such as liquidity crisis caused by COVID-19 and unattractive terms of BOT are cited as reasons for private players' reluctance, potentially leading to stalled highway projects.
Most highway developments in recent times have been carried out through the Engineering Procurement Construction (EPC) mode or the Hybrid Annuity Model (HAM).
Union Minister Nitin Gadkari has indicated that several small BOT projects, worth less than Rs 1,000 crore, are in the pipeline.
Jain also discussed the Centre's highway development plans as outlined in the 2047 vision document. He revealed that around 50,000 kilometers of access-controlled highways will be developed by 2037, a decade earlier than initially planned.
In the first phase of this vision, the Center is expected to approve highway and highway projects worth Rs 20 trillion. This phase is currently being studied by the Union Cabinet and more details will be revealed soon.
Jain highlighted that about 35 percent of this sanctioned amount is expected to be financed through private investments.
Stressing the importance of ensuring zero maintenance issues for roads, he said: “We are very close to ensuring that every road is someone's baby.” To achieve this, maintenance agencies are appointed in advance.
Moreover, Jain said the Center is formulating plans to increase private investment in the National Highways Authority of India's (NHAI) Infrastructure Investment Trust (InvIT). This trust has recently emerged as another successful route to revenue generation in the highway sector.
First print: January 9, 2024 | 12:32 pm IST