Telangana takes to asset monetisation of TOT tollways

V Rishi Kumar Hyderabad | Updated on January 11, 2018 Published on January 11, 2018

First to take the initiative: The 158-km-long Outer Ring Road was constructed in three phases at a cost of ₹6,696 crore, and has 13 road stretches with 19 toll plazas that will be monetised

CRIS, LEA to advise on Hyderabad Outer Ring Road

The Telangana government has initiated a process to monetise toll-operate-transfer (ToT) asset road projects.

By appointing a consortium of LEA Associates South Asia Pvt Ltd and Crisil Risk & Infrastructure Solutions Ltd (CRIS) to support the move as Transaction Advisors for the monetisation of the Hyderabad Outer Ring Road project assets, it has become the first State to take up such an initiative.

Asset recycling

The toll, operate and transfer (TOT), an asset recycling model, enables completed road projects to be monetised. The Ministry of Road Transport and Highways (MoRTH) and the National Highways Authority of India (NHAI) are expecting bids for the first TOT bundle of National Highways in February.

Jagannarayan Padmanabhan, Director, Transport & Logistics, CRIS, said in a statement: “TOT is an effective asset recycling model, enabling governments to raise resources for investment in infrastructure without resorting to budgetary support or debt. The Nehru Outer Ring Road (NORR) TOT project will be watched closely, as it will show other States the way forward on asset recycling.”

‘Unique project’

Avadesh Singh, Project Team Leader of LASA, said, “A large number of traffic and engineering surveys will be carried out to give the investor community comfort regarding the condition of the highway, and base- and horizon-year traffic levels. Data will be provided to bidders through a virtual data room to afford better bid transparency. This is a unique project where the O&M stipulations need to be designed in terms of performance standards, service levels and maintenance intervention regime.”

Hyderabad Growth Corridor Ltd (HGCL) has recently started the process of monetising the Nehru Outer Ring Road in Hyderabad under this model.

Extra-budgetary resources

The project is expected to garner significant extra-budgetary resources for Telangana that can be used for other infrastructure assets. There is no additional cost to users or taxpayers.

The 158-km-long NORR was constructed in three phases at a cost of ₹6,696 crore, and has 13 road stretches with 19 toll plazas that will be monetised.

HGCL envisions adding value to NORR through private sector participation that would upgrade the asset on a continuous basis while efficiently taking care of its O&M needs. The project is expected 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 in the past few years.

Published on January 11, 2018
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