Bharatmala,TOT model to usher in paradigm shift in road infra: ICRA

Highway infrastructure development in the country is likely to undergo a paradigm shift with government's recent initiative Bharatmala along with other programmes that include monetisation of highway assets, rating agency ICRA said today.

"Bharatmala Pariyojana is expected to bring a paradigm shift in the development of highway infrastructure in the country with focus on improving efficiency of national corridor, faster pace of execution, and using innovative models like Hybrid Annuity Model (HAM), and TOT (toll, operate, transfer) model which will reduce the Government's funding requirement," ICRA said in a statement.

The government has recently unveiled a massive new highway development programme (covering 83,000 kms) under the Bharatmala Pariyojana, which will see a paradigm shift in highway development with the focus on improving efficiency of the national corridor and a long-term view on the highways network, it said.
 

Shubham Jain, Vice President and Sector Head - Corporate Ratings, ICRA Ltd, said, "The Bharatmala Pariyojana aims to bridge critical infrastructure gaps through corridor-based development. Therefore, it has the potential to change the entire landscape, if implemented as per plan."

Bharatmala along with other highway development schemes are estimated to cost Rs 6.92 lakh crore and about 80 per cent of the funding will be from the government's contribution besides from budgetary allocation and market share.

"The estimated share of private sector investment for the programme is Rs 1.06 lakh crore while the expected funding through the monetisation of assets by the toll-operate-transfer (TOT) route is estimated at Rs 0.34 lakh crore. These two together will form about 20 per cent of total estimated fund requirement of Rs 6.92 lakh crore for Bharatmala Pariyojana phase-1 and other highway development schemes," ICRA said.

It said success of TOT would enable more asset recycling and thereby enable NHAI garner higher proceeds through monetisation.

Jain added, "The first set of TOT offering saw robust results in terms of the winning bid being significantly higher than the NHAI's expectation. Going by this, government's plan of raising Rs 34,000 crore from TOT looks well within reach."

Bharatmala targets completion of 83,677 km of highways by 2022.