Context:
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.
Relevance:
Facts for Prelims
Dimensions of the Article:
- Toll Operate Transfer (TOT) Model
- 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.
