NHAI is going to announce 3rd round of TOT auctions soon

The NHAI is going to seek bids for the states of Tamil Nadu, Uttar Pradesh, Bihar and Jharkhand next month and is expecting to raise Rs 5,000 crore

New Delhi: The government is soon going to put 550 km of roads up for leasing to private companies under the third round of auctions of the toll-operate-transfer (TOT) plan in four states. The National Highways Authority of India (NHAI) is going to seek bids for the states of Tamil Nadu, Uttar Pradesh, Bihar and Jharkhand next month and is expecting to raise Rs 5,000 crore from the plan.

"Details of the third round of auctions are expected to be finalised soon and bids will be invited in a month," an official said.

The TOT model

The TOT model was introduced in 2016 as an asset monetisation plan for publicly-funded highways. Under the plan, the entity that gets the lease for a particular stretch of road pays a lump sum payment in return for a long-term toll collection right. The current programme offers a lease of 30 years.

The government is pursuing the TOT model to raise funds in the sector and attract private funding which has so far remained subdued. The first round of TOT auctions, under which 680 km of highways were offered, ended in February 2018. The government has then raised Rs 9,000 crores from the auction.

Second round had drawn a lukewarm response

However, the second round of auctions were cancelled in February 2019 after it elicited a lukewarm response. At the time, Cube Highways, a toll road operator backed by I Squared Capital and International Finance Corporation, had offered Rs 4,612 crore against the base price of Rs 5,362 crore.