Toll collection, operation and maintenance of the Outer Ring Road (ORR) have been awarded to a private agency for 30 years on Toll, Operate and Transfer (TOT) basis, through international competitive bidding, HMDA said in a statement on Thursday.
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IRB Infrastructure Developers Limited won the contract with a bid price of ₹7,380 crore for 30 years, which amounts to ₹246 crore per annum. This is a far cry from the estimated annual toll collection of ₹540 crore.
HMDA officials, however, justified this saying that the bid amount was calculated on NPV (Net Present Value) of future collections after duly discounting for inflation and price index, besides administrative and maintenance expenditure. The bid price is comparable with similar TOT transactions done by National Highways Authority of India (NHAI), the statement said.
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HMDA, on November 9 last year, invited bids for the operation of ORR on TOT basis for 30 years. The submission deadline was fixed as March 31, 2023. Of the 11 interested parties, four were found eligible to participate in the tender.
“This transaction marks one of the largest asset monetisation deals in India’s road sector, executed by either the Central or [the] State government. Considering the revenue multiplier of the transaction value, it is one of the best bids finalised for the road infrastructure projects in the country,” the statement read.
TOT helps the Government to utilise the private sector investment for new infrastructure creation. It is an internationally accepted model for asset monetisation while the ownership of the asset continues to be with the State government, it said.
State government’s preference for TOT mode was based on the Centre’s approval for asset monetisation of select NHAI highways of 1,600 kilometre length on the same basis, with concession periods ranging in 15-30 years. In addition, Maharashtra State Road Development Corporation (MSRDC) has also done TOT project with a 10-year concession period, the note said.