Advertisement
When should a housing society in Mumbai start considering re...
From GST on JDAs to SEBI’s REIT reclassification and the S...
Stay ahead in the world of real estate with our daily podcas...
Stay ahead in the world of real estate with our daily podcas...
The Union Government is set to review the model contract for the Toll Operate Transfer (ToT) mode of highway monetisation to enhance its viability and attract investors. The revised concession agreement is anticipated in April 2025, alongside a revamped Build Operate Transfer (BoT) model. Officials clarified that both ToT and Infrastructure Investment Trusts (InVITs) will be pursued to achieve the National Monetisation Pipeline (NMP) targets, with INR 3.5 lakh crore expected from highways. Revisions aim to address revenue variances promptly and balance risk-sharing between the government and private developers for future infrastructure projects.
The Union Government is preparing for another review of the model contract for the Toll Operate Transfer (ToT) mode of highway monetisation, aiming to make it more viable and stimulate investor interest. Advertisement
The revised draft of the concession agreement is likely to be finalised by April. The updated regulations, to be announced following the review, are expected to address concerns raised by the government as well. At present, Infrastructure Investment Trusts (InVITs) are considered to deliver better returns compared to the ToT model for the government. Reports suggest that the government is showing a preference for InVIT over ToT.
Both modes of monetisation are expected to contribute towards meeting the ambitious targets set in the next National Monetisation Pipeline (NMP). The NMP-I had a target to raise INR 6 lakh crore via monetisation of assets in various sectors and the NMP-II, announced in Budget FY26, aims to mobilise INR 10 lakh crore, of which INR 3.5 lakh crore is projected to come from highways.
In March, eleven highway stretches are to be monetised through National Highways Infrastructure Trust (NHIT) for around INR 18,000 crore and one round of monetisation through Toll Operate Transfer (ToT) is also expected to go through.
The most recent review of the Model Concession Agreement (MCA), used for monetising publicly funded operational national highways, was completed in March 2024. As part of this review, the interval between toll collection reviews on monetised highways was reduced to five years from seven. This adjustment ensures that variations in toll collection are addressed more promptly, allowing corresponding changes to be made to the concession period. It also increases the number of reviews during the concession period from two to three.
In addition, the degree of variance in toll collections against projected figures, which triggers a review of the concession period, has been reduced. Previously, a variance of 20% or 30% would prompt a review, but this has now been lowered to 5%. Consequently, if collections are either 5% lower or higher than projected, changes to the concession period will be considered.
Furthermore, the government is planning to release a revised MCA for highways developed under the Build Operate Transfer (BoT) model in April. This revision aims to balance the risks shared between the government and private developers.
The Ministry of Road Transport and Highways (MoRTH) has mandated that all pre-construction preparations and activities must be concluded definitively before the issuance of a letter of award.
Reviving the BoT model is deemed essential as the government focuses on developing high-speed corridors to enhance logistical efficiency. These corridors require significant capital investment, and the government's plan is to expand the length of high-speed corridors from the current 4,500 km to 50,000 km.
The upcoming revisions to the Toll Operate Transfer and Build Operate Transfer models signal the government's intent to make highway monetisation more appealing to investors. By balancing risks, streamlining processes, and ensuring timely reviews of toll collections, the authorities aim to boost investor confidence and secure much-needed capital for infrastructure expansion.
5th Jun, 2025
25th May, 2023
11th May, 2023
27th Apr, 2023
Advertisement
Facebook
Whatsapp
