NHAI's Asset Monetisation Auction Attracts Global Investors For Longest Single Highway Acquisition

A group of investors is keen on purchasing a 361-km highway asset via the National Highways Authority of India's (NHAI) ToT 12 auction.

They are Canadian fund CDPQ, KKR, Cube Highways, and domestic road operator IRB Infrastructure Developers.

Last month, the bids for the National Highway (NH)-26, Lalitpur-Lakhnadon stretch in Madhya Pradesh were submitted, and the technical evaluation is currently ongoing.

According to an Economic Times report, the bids are predicted to be disclosed in the next two weeks.

This 12th road asset bundle has been provided under the toll-operate-transfer (ToT) agreement as part of the government's asset monetisation programme.

Under the ToT 11 auction, another road project, the 82-km-long Allahabad Bypass, has received only one bid, from Cube Highways.

The NHAI is expecting a valuation of Rs 4,000 crore for the ToT 12 bundle, as per ET report.

"It is the longest single asset ever offered by the NHAI and also with a 20-year concession period, making it attractive for the investors," said one of the bidders.

Both KKR and CDPQ submitted their bids through their respective infrastructure trusts — Highways Infrastructure Trust and India Highway Concession Trust.

Road Assets Monetisation

Ministry of Road Transport and Highways monetises its assets under three different modes, including — project-based financing, the ToT model, and infrastructure investment trusts (InvIT).

Under the ToT model, public funded projects, operational for two years, are put up for bidding, wherein the right of collection and appropriation of fee is assigned for a predetermined concession period to concessionaires (developers or investors) against the upfront payment of a lump sum amount to NHAI.

After the NHAI started monetising its highway assets, Macquarie had won the first ToT bundle by paying Rs 9,681 crore — 1.5 times higher than the base price, in 2018.

For the current FY, the ministry has set a target of Rs 44,000 crore — planned to be met through the accruals from the ToT model, two rounds of infrastructure investment trust, and toll securitisation.