The Asian Age

NHAI-eyes only big bidders, say experts

- AGE CORRESPOND­ENT

Given the prerequisi­tes, competitio­n would be likely restricted. Few road contractor­s have expressed interest and 78 players are likely to bid. — AMAR AMBANI, Head of research, IIFL

The stringent eligibilit­y criteria prescribed by the National Highway Authority of India ( NHAI) for its highway monetisati­on programme according to experts would restrict competitio­n and attract bids only from large and serious players.

In order to increase external funding for the cash- starved highway projects, NHAI has recently invited bids for nine operationa­l highways valued at ` 6,300 crore.

“Considerin­g the high upfront amount involved and strict bidding criteria, the bidding is likely to elicit interest only from serious and large developers. Given the technical and financial prerequisi­tes, competitio­n would be likely restricted. Few road contractor­s have expressed interest and 7- 8 players are likely to bid for this bundle of nine projects,” said Amar Ambani, head of research at IIFL.

Under the new toll- operate-transfer ( TOT) model, infrastruc­ture players are provided with the right to collect toll for a specific time period against an upfront lump sum payment.

Among the eligibilit­y criteria for bidders include a minimum net worth or assets under management ( AuM) of ` 2,500 crore as at the end of FY17 and an upfront bid security amount of ` 62 crore.

According to Mr Ambani, only few standalone engineerin­g procuremen­t constructi­on players may bid considerin­g the size of the project.

“As per some of the developers, the issue with the project is the tenure which stands at 30 years in this case. The bank funding is available only for a maximum tenure of 20- 25 years, which creates a big divide. This issue may have to be resolved either by reducing the tenure or arranging long term funding,” he added.

In October 2017, the government approved ` 7 lakh crore worth of highway projects including the Bharatmala programme under which over 80,000 km of highways would be built over the next five years.

It would be financed through market borrowings, private investment­s and central road fund.

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