Govt plans to raise Rs 60,000 crore by leasing roads to private companies

With an aim to mobilise additional resources to fund the construction of highways, the government has come up with a plan to raise up to Rs 60,000 crore, over the next six months, by offering as many as 104 existing tollable projects on lease to private players including global funds with patient capital.

The ministry of road transport and highways has already sent the proposal to lease highway projects via the toll-operate-transfer (TOT) route to the Prime Minister’s Office for approval and the proposal is likely to be considered by the Cabinet soon. Once the Cabinet gives its nod, global tenders would be floated to lease out the projects. Around 20 global funds with long-term capital including Nomura, Macquarie and Abu Dhabi Investment Authority have shown interest in these projects, but as they are unlikely to invest in a single project, proposal has been made to bunch 5-6 projects, together valued at  around $150 million.

Under the proposed model, bidders will make an upfront payment to the government and recoup their investments and returns by collecting toll over a 20-year lease period. After the lease tenure expires, these projects would return to the government’s fold. Furthermore, the investors will have the opportunity to borrow funds for the upfront payment by securitising the toll.

The 104 projects identified for the plan fetch a combined toll revenue of Rs 4,000-5,000 crore annually and the entire money generated from the TOT plan would be ploughed back for development and re-development of highways.