The National Highways Authority of India (NHAI) plans to significantly increase its monetization of highways through the Toll-Operate-Transfer (ToT) model this financial year. It intends to offer around 12 bundles of highway stretches for bidding by private companies, up from just four bundles offered last year. The next round of bidding for three new bundles will begin in June. This year, the bundles will comprise highways of different sizes - large, medium and small, unlike the big and small categories previously. NHAI has identified 33 highway stretches spanning 2,741 km that will be offered for monetization this year. NHAI expects to raise INR 54,000 crore in 2024-25 from monetization through the ToT and InvIT models.
The National Highways Authority of India (NHAI) plans to significantly scale up its monetization of highways through the Toll-Operate-Transfer (ToT) model. It intends to offer around 12 bundles of highway stretches for bidding by private companies in the current financial year.
This is a major increase compared to just four bundles offered for bidding last year. Last year, the four bundles that were monetized through the ToT model raised INR 15,968 crore for NHAI.
In a departure from past practice, NHAI will now offer three bundles simultaneously for each bidding round, as opposed to two bundles previously. Three bundles will be put up for bidding every quarter to cater to strong demand from investors. The highest bidder will be allowed to collect tolls, maintain and operate the highway stretches for 20 years in exchange for an upfront payment.
NHAI has identified 33 highway stretches spanning 2,741 km that will be offered for monetization this time. The specific sections that will be monetized through the ToT or InvIT models are still being finalized. The identified stretches are located across states like Uttar Pradesh, Rajasthan, Maharashtra, Andhra Pradesh, Telangana, Jharkhand, Odisha, Tamil Nadu and Bihar. A 4.4 km section of the Badarpur elevated corridor will also be monetized.
Last year, bids for Bundles 11-14 came from entities like KKR-backed Highways Infrastructure Trust, Cube Highways, IRB Infrastructure Trust, Abu Dhabi Investment Authority-backed funds, National Investment and Infrastructure Fund (NIIF) and Adani Group.
NHAI is aggressively pursuing the ToT model to meet its target of INR 54,000 crore from monetization in the current financial year, significantly higher than INR 40,227 crore achieved last year. Of the FY25 target, INR 8,000 crore is expected from project-based financing and INR 46,000 crore from the ToT and InvIT models.
In 2023-24, InvITs contributed INR 15,700 crore to monetization. On average, analysts estimate NHAI realizes around INR 22 crore for every kilometer of highway monetized, though the amount varies with traffic density and vehicle type using the road.
The bidding process for Bundles 15 and 16, comprising the 124 km Trichy-Tovrankurichi-Madurai section and two stretches of 251 km on the Hyderabad-Nagpur corridor respectively, is currently underway. These transactions are expected to be completed in the coming weeks.
The next round of bidding for three new bundles will begin in June, according to the official. This year, the bundles will comprise highways of different sizes - large, medium and small, unlike the big and small categories previously.
The first award of highways under the ToT model was done in 2018. Since then, INR 42,334 crore has been raised through this route by transferring 2287 km of highways to investors.
The aggressive pursuit of the ToT model reflects NHAI's focus on leveraging private investment to expand and upgrade India's national highway network. Successful transactions of the upcoming bundles will support the authority's target of significantly higher monetization this year to fund its ambitious infrastructure development goals.
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