Home Transport Infrastructure News Road & Highway News After 8 years, NHAI invites bids for 15 road projects

    After 8 years, NHAI invites bids for 15 road projects

    NHAI invites bids for 15 road projects-min

    After eight years, the National Highways Authority of India (NHAI) has called for prequalification bids from road developers for 15 road projects on a build-operate-transfer (BOT) modal with a tentative total project cost in excess of Rs 22,000 crore and totaling nearly 800 km.

    The 15 road projects are spread across six states are Andhra Pradesh, Haryana, Maharashtra, Karnataka, Tamil Nadu and West Bengal. Majority of the roads to be put out for bidding will be six-lane highways, while three will be four-lane and one an eight-lane highway. The maximum project cost of Rs 3,328 crore will be for a 60-km six-lane highway in Haryana, running on the Delhi-Faridabad-Sohna route.

    Package 1 of Tambaram-Chengalpattu-Tindivanam in Tamil Nadu is expected to have a project cost of Rs 3,309 crore which will be 24.5 km six-lane highway in Tamil Nadu. Package 2 of the same road which will be an eight-lane highway of 68.5 km is expected to have a project cost of Rs 3,062 crore. The remaining roads will have a tentative project cost range of Rs 570 crore to Rs 1,600 crore.

    The highways authority has asked for annual prequalification for these 15 road projects, after which financial bids will be called out from shortlisted bidders. Road developers are now keen to bid for road projects on a BOT basis, provided NHAI puts them out on the basis of viability and where expectation of traffic is high. Bankers who were earlier averse to funding BOT toll projects could be open to funding some of the commercially viable projects now.

    The NHAI move comes at a time when concerns have been raised on the authority’s financials. Its cumulative debt has mounted to `1.78 lakh crore in FY19 from around `40,000 crore in FY14. The borrowing is expected to go up to Rs 3.31 lakh crore by FY23 as it needs resources to fund construction of around 25,000-km highway projects in six years under the Bharatmala programme.

    CARE Ratings expects the overall pace of highway construction to slow down to about 26-27 km per day during FY20 owing to a slowdown in pace of awards, limited budgetary support, high risk aversion of public sector banks to infrastructure projects, worsened liquidity position of NBFCs and disruption in construction activity during the monsoon and high cost of land acquisition.

    Challenges associated with BOT projects in terms of the government not keeping its part of the obligation in public-private partnership, issues around high premium on projects bid out on BOT, and bankers not willing to support these projects had resulted in no projects being bid out on the BOT basis for a long time. With tepid interest from developers and bankers, NHAI had started bidding out projects only on engineering, procurement and construction (EPC) contracts and through a new hybrid annuity model or HAM.

    While the bid document details are yet to be made public, developers believe that one of the main apprehensions related to the termination clause would have been addressed in this round of bids. The demand was that it should be made similar to that in toll-operate-transfer (TOT) model.

    The industry demand was that the quantum of termination should not be based upon NHAI’s total project cost, but it will be the NPV (net present value) of the unexpired concession. What this means is that termination payment will be the basis of the future cash flow potential of the project instead of the project cost that was fixed at the time of bidding.


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