With the introduction of HAM, the risk profile of bankers was reduced. In a HAM project, the government pumps in 40 per cent equity, the rest is made by the concessionaire.
The tolling risk was taken care of. Under HAM, the government bears the revenue risk in projects where traffic flow turns out lower than anticipated, leading to a reduced toll collection. Earlier, in BOT projects, traffic, operations, and maintenance risks had to be borne by the developer.
A new financing route - toll-operate-transfer (TOT) - was approved by the Cabinet Committee on Economic Affairs in August 2016, when it authorised the National Highways Authority of India (NHAI) to monetise national highway projects that were operational and generating toll revenues for at least two years after commercial operations date via the TOT model.
Experts believe the leakages in tolling were addressed through TOT or the road monetisation projects.
Besides tolling a lot of EPC projects which were complete or required maintenance in the future and with TOT, the government received upfront payment for investing it further in future highway contracts.
In February, a joint venture between Macquarie and Ashoka Buildcon bagged the Union government’s first batch of TOT projects invited by the NHAI, quoting a price bid of Rs 96.81 billion.
Another initiative of the government, which is being seen as step in the right direction by experts, is the introduction of FASTags for seamless commute on national highways. The move, aimed at ending congestion at toll plazas besides ensuring leakage-proof toll revenue collection, was introduced in September 2017.
FASTags are affixed on the windshields of vehicles and use radio-frequency identification technology to enable vehicles to pass through toll plazas, through designated lanes, without waiting in queues as the payment is made electronically.
“Technology has helped in tracking truck movement. Together these initiatives ensured the road sector remained alive,” said Vishwas Udgirkar, partner, Deloitte Touche Tohmatsu India LLP.
Paved With Good Intentions
First bundle of nine projects consists of five highways in Andhra Pradesh and four in Gujarat
Four bids were received for the first bundle — from Brookfield Asset Management, Macquarie-Ashoka Buildcon, IRB Infrastructure, and Roadis-NIIF
Rs 96.8 billion: Total value of the first bundle of projects
Macquarie-Ashoka Buildcon bid was 1.5 times higher than the base price of Rs 62.6 billion
75 operational highway projects have been identified for monetisation via the TOT model