Government Bets on Toll Operate Transfer Model To Monetise Highways, Know What It Is Here

Government plans to monetise highways and raise Rs 85,000 crore till 2024-25

Aiming to generate funds to propel the economy, the Centre plans to monetise several of its big-ticket infrastructure across sectors in the next five years under its Asset Monetisation Programme. Under this, it aims to generate Rs 85,000 crore from the highways sector alone by 2024-25.

While around Rs 10,250 crore worth of highways were to be monetised in 2020-21 (though the target could not be achieved), in 2021-22 the Government plans to monetise Rs 10,000 crore of highways. Similarly, the target for 2022-23 is Rs 20,000 crore, for 2023-24 the aim is to generate Rs 20,000 crore by monetisation, while for 2024-25 the objective is to generate Rs 24,750 crore through monetising highways.

In 2020-21 till January 31, 2021, the Ministry of Road Transport and Highways had managed to monetise 566 km of roads worth Rs 5,011 crore through the ToT route.

Highways under this plan, are to be monetised through the Toll Operate Transfer (ToT) or the Infrastructure Investment Trusts or InvIT route.

While under InvITs, the land assets are transferred to a trust providing investment opportunity for institutional investors, in the ToT model, public funded projects which are operational for two years, are put up for bidding.

What is ToT model?

In 2016, the Cabinet Committee on Economic Affairs (CCEA) authorised National Highway Authority of India (NHAI) to monetise public funded national highway projects and approved the ToT model. Under this model, public funded projects, operational for two years, are put up for bidding, wherein the right of collection and appropriation of fee is assigned for a predetermined concession period (30 years) to concessionaires (developers or investors) against the upfront payment of a lump sum amount to NHAI.

Why ToT model was implemented?

The Government is of the view that the TOT model will provide an efficient operation and maintenance (O&M) framework which would reduce NHAI’s involvement in projects post construction completion.

Also the model will help in utilisation of the corpus (generated from proceeds of such project monetisation) by the Government to meet fund requirements for future development and O&M of highways in the country, including in unviable geographies.

 Another reason behind kickstarting this model was to facilitate efficient toll realisation through private sector and to create new business opportunities.