 "Anurag Jain")
The Centre is likely to come up with its reworked concession agreement for the Build Operate Transfer (BOT) model by the end of this month. This move will remove a major obstacle in the government's push to bring in private capital for the construction of national highways, according to Union highways secretary Anurag Jain.
Speaking at an event organised by public sector unit financer REC Limited in New Delhi, Jain mentioned that the Centre has resolved most issues related to the existing interpretation of the BOT concession agreement. The renewed agreement is currently undergoing inter-ministerial consultation.
Jain added that the modified document is expected to be in force within a month. BOT is the highway construction model where a private entity constructs and maintains a road with its own investment for a specified period, receiving toll collection rights from the authority.
The decision to revise the BOT concession agreement comes amid lukewarm interest from private entities in the asset monetisation model. Factors like a liquidity crunch induced by COVID-19 and unappealing terms of BOT have been cited as reasons for private players' reluctance, potentially leading to stalled highway projects.
Most highway development in recent times has been carried out either through the Engineering Procurement Construction (EPC) mode or the Hybrid Annuity Model (HAM).
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Union Minister Nitin Gadkari has indicated that several small BOT projects, valued at less than Rs 1,000 crore, are forthcoming.
Jain also discussed the Centre's highway development plans as outlined in the vision document for 2047. He revealed that approximately 50,000 kilometres of access-controlled highways are planned to be developed by 2037, a decade earlier than initially planned.
In the first phase of this vision, the Centre is expected to sanction highway and expressway projects worth Rs 20 trillion. This phase is currently under the Union Cabinet's consideration, with more details to be revealed soon.
Jain highlighted that around 35 per cent of this sanctioned amount is anticipated to be funded through private investment.
He stressed the importance of ensuring zero maintenance concerns for roads, saying, “We are very close to ensuring that every road is somebody's baby.” To achieve this, maintenance agencies will be appointed in advance.
Furthermore, Jain mentioned that the Centre is formulating plans to increase private investment in the National Highways Authority of India’s (NHAI) Infrastructure Investment Trust (InvIT). This trust has emerged as another successful route for monetisation in the highways sector recently.
