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Toll Operate Transfer (TOT) Model


The National Highways Authority of India (NHAI) recently awarded two highway monetisation projects worth Rs 6,584 in the toll, operate, and transfer (TOT) mode.


Facts for Prelims

Dimensions of the Article:

  1. Toll Operate Transfer (TOT) Model
  2. Utilization of Proceeds

Toll Operate Transfer (TOT) Model

Authorization and Purpose
  • CCEA Authorization: In 2016, the Cabinet Committee on Economic Affairs (CCEA) authorized the NHAI to monetize public-funded national highway projects through the TOT model.
  • Purpose: The TOT model aims to monetize operational public-funded projects by assigning fee collection rights to concessionaires against an upfront lump sum payment.
Encouraging Private Participation
  • Private Involvement: The TOT model is designed to promote private sector participation in the highway sector, enhancing infrastructure development and management.
Model Mechanics
  • Bidding Process: Operational projects, in service for two years, are offered for bidding.
  • Concession Period: Concessionaires (developers or investors) are granted a predetermined 30-year period for fee collection and appropriation.
  • Toll Revenue Basis: Assignment of rights is based on the toll revenue potential of selected national highway projects.
  • O&M Obligations: Concessionaires are responsible for project Operation & Maintenance (O&M) throughout the concession period.
  • Transparent Procurement: Concessionaires are selected through a transparent and uniform procurement process within an approved framework.
Utilization of Proceeds
  • Fund Utilization: The model generates a corpus, which the government can use to fund future highway development and O&M, even in less economically viable areas.
  • Meeting Infrastructure Needs: It supports the government in addressing highway infrastructure needs, including those in less lucrative regions.

December 2023