The TOT model, an asset recycling model which enables completed road projects to be monetised, is now being initiated at the state level in India.
While the Ministry of Road Transport & Highways (MoRTH) and the National Highways Authority of India (NHAI) are expecting bids for the first TOT bundle of National Highways in February 2018, Telangana state has become the first state to kick-off the asset monetisation exercise.
In a statement, rating agency Crisil said this is the first TOT initiative being undertaken by a state, and would set the pace for asset recycling as recommended by the Kelkar Committee on public-private partnerships. The rating agency viewed it as also a credible way to raise extra-budgetary resources.
Hyderabad Growth Corridor Ltd (HGCL) has recently started the process to monetise the Nehru Outer Ring Road (NORR) in Hyderabad under this model and has appointed a consortium of LEA Associates South Asia Pvt Ltd (LASA) and CRISIL Risk & Infrastructure Solutions Ltd (CRIS) to support as transaction advisors.
Crisil expects the project to generate significant interest among investors – both Indian and international, including sovereign wealth funds, infrastructure investment funds and road developers – due to its location, minimum risks of construction, land acquisition, environmental clearances, and known traffic flow for the past few years.
The project is expected to garner significant extra-budgetary resources for Telangana that can be used for other infrastructure assets, said the rating agency, adding that there was no additional cost to users or taxpayers.