NEW DELHI: The Build Operate Transfer (BOT) model for highway construction is back, with the National Highways Authority of India (NHAI) calling bids for projects entailing combined investments of Rs 31,000 crore via this route.
In all, 8 key highway stretches including a greenfield access-controlled expressway is proposed to be developed in the BOT model, which has been dormant for several years due to risk aversion among private investors.
The total length of highways for which bids have been invited is 517.4 km and total project cost is expected to be Rs 30,975 crore, to be precise. These projects were part of the list of 15 highway stretches of 937 km that were to be awarded under BOT this financial year. The total project cost of the highways in that list was Rs 44412 crore.
Of the list of 15, four will now be developed using Hybrid Annuity Model (HAM) and one will be executed through Engineering Procurement Construction (EPC) mode.
The projects on offer under BOT include a 6-lane greenfield access controlled expressway between Agra and Gwalior that will pass through Uttar Pradesh, Rajasthan and Madhya Pradesh. This 88.4 km expressway’s project cost has been estimated at Rs 3841 crore. Other highways for which bids have been called are in Maharashtra, Assam and Telangana.
The award of these projects are expected to be done by the end of this financial year on March 31.
The government wants to push BOT in a big way to bring back private participation in highway construction. In the BOT model, winning the concession builds and operates the highway thus saving resources of the government. However, there is a provision in some cases for capital grants of up to 40% in the BOT model also.
During 2007 and 2014 only BOT was used for building highways. With the disputes and delays that the system ran into, the pace of highway construction slowed down considerably.
In 2018-19 and 2019-20, no road concessions were awarded on the BOT model. Officials say that the problems that the BOT faced have been sorted out and the contractors are willing to bid for highways under this model again.
In the last few years, almost the entire cost of highway construction has been borne by the government through Hybrid Annuity Model (HAM) and Engineering Procurement and Construction (EPC). This has resulted in a big jump in budgetary support to NHAI. This year the budget will provide Rs 1.62 lakh crore to NHAI as against Rs 1.41 lakh crore last year. In 2021-22 NHAI had got Rs 57081 from the budget and rest from debt. From the 2022-23 budget NHAI was barred from raising money through bonds.
The HAM model of highway development was announced in 2016 where NHAI pays 40% of the cost of highway construction upfront to the concessionaire and rest in instalments. Under EPC the government agency bears the full cost of making the highway.
Apart from bringing in private sector resources in highway construction and reducing dependence on budgetary resources, the government also wants to push BoT due to quality issues in construction by other means.
Officials say that BoT will also improve the quality of construction of highways. In the EPC model the quality of construction is below par because the contractor’s job finishes on completion of the project while in BoT the concessionaire also has to operate the asset for 20-30 years so the quality of construction is much better, they say.
The government has been taking many steps to make BoT attractive by making changes in concession agreements and offering only viable projects with land already tied up for bidding.
Source: The Financial Express
