The Modi government on Wednesday cleared a plan to auction completed stretches of national highways built from public funds and give investors such as sovereign funds the right to collect toll.
The money raised from the auction would be used to build new highways.
The road transport and highways ministry has identified 75 highway stretches that would go under the hammer to begin with, an official statement said.
“We plan to auction completed projects in bundles of five-six. The length of the first such bundle of highway projects is around 6,000 km,” a ministry official said.
The highest bidder would have to pay the money upfront and will get the toll collection rights on the auctioned stretch for 30 years. The bidder would also have to operate and maintain the highway stretch.
Union minister of road transport and highways Nitin Gadkari hopes to generate between Rs 80,000 crore to Rs 1 lakh crore from the first tranche of auctioned projects.
Gadkari has set a target to build 30km of highway per day. If he has to deliver on this promise, the government needs to invest Rs 5 lakh crore over the next five years.
The funds generated from these auctions could be used to meet its requirements for expansion of highways and their maintenance. “This could address development/strengthening of highways in unviable geographies,” the statement said.
A government official told HT that international sovereign funds and pension funds looking at long-term investment for assured returns were expected to bid for these projects.
“The completed highway projects fit their bill as they are risk free. There are no construction-linked risks like land acquisition issues or regulatory hurdles,” the official said.
The government said the existing model of inviting companies to operate and maintain highways for six-nine years had only attracted smaller investors, largely contractors and developers. Jim Dray Authentic Jersey