NHAI Calls Bids For Rs 31,000 Cr Highway Projects

In a significant move to rejuvenate private sector participation in highway construction, the National Highways Authority of India (NHAI) has announced bids for projects worth Rs 31,000 crore under the Build Operate Transfer (BOT) model. 

This marks a revival of the BOT model, which had been dormant for several years due to risk aversion among private investors.

The NHAI has invited bids for eight key highway stretches, including the development of a greenfield access-controlled expressway. The total length of highways for which bids have been sought is 517.4 km, with an estimated total project cost of Rs 30,975 crore. 

These projects were part of a list of 15 highway stretches totaling 937 km slated for award under the BOT model in the current financial year. The initial estimated cost for all 15 projects was Rs 44,412 crore.

Among the projects offered under the BOT model is a 6-lane greenfield access-controlled expressway connecting Agra and Gwalior, spanning Uttar Pradesh, Rajasthan, and Madhya Pradesh. The estimated project cost for this 88.4 km expressway is Rs 3,841 crore. Additional highways in Maharashtra, Assam, and Telangana are also included in the bidding process.

The government aims to boost private participation in highway construction through the BOT model, where the concessionaire both builds and operates the highway. This model allows for substantial savings in government resources. 

While there is a provision for capital grants of up to 40% in certain cases, the government is keen on promoting BOT as a preferred mode.

Between 2007 and 2014, the BOT model was extensively used for highway construction. However, due to disputes and delays, the pace of construction slowed down significantly. In 2018-19 and 2019-20, no road concessions were awarded under the BOT model. Officials now assert that the issues facing the BOT model have been resolved, and contractors are once again willing to bid for highway projects using this model.

In recent years, the government has primarily borne the cost of highway construction through the Hybrid Annuity Model (HAM) and Engineering Procurement and Construction (EPC). This has led to a substantial increase in budgetary support to NHAI. For the current fiscal year, the budget allocates Rs 1.62 lakh crore to NHAI, compared to Rs 1.41 lakh crore in the previous year.

The push for the BOT model is not only aimed at bringing in private sector resources but also addressing quality concerns. Officials argue that the BOT model ensures better construction quality, as the concessionaire is responsible for operating the asset for 20-30 years. This is in contrast to the EPC model, where the contractor's involvement concludes upon project completion.

To make the BOT model more attractive, the government has made changes in concession agreements and is offering only viable projects with pre-arranged land for bidding. The bids for these highway projects under the BOT model are expected to be awarded by the end of the current financial year on 31 March.