Government bets on toll transfer model to monetize highways, find out what it is here

Government plans to monetize highways and raise Rs 85,000 crore until 2024-25

In an effort to generate funds to propel the economy, the Center plans to monetize many of its important infrastructure across all sectors over the next five years as part of its asset monetization program. By virtue of this, it aims to generate Rs 85,000 crore from the motorway sector alone by 2024-25.

While some Rs 10,250 crore of highways were to be monetized in 2020-2021 (although the target could not be reached), in 2021-2022, the government plans to monetize Rs 10,000 crore of highways. Likewise, the goal for 2022-23 is Rs 20,000 crore, for 2023-24 the goal is to generate Rs 20,000 crore by monetization, while for 2024-25 the goal is to generate Rs 24,750 crore thanks to the monetization of highways.

In 2020-2021 until January 31, 2021, the Ministry of Road Transport and Highways had succeeded in monetizing 566 km of roads worth Rs 5,011 crore via the ToT road.

Highways under this plan are to be monetized through Toll Operate Transfer (ToT) or Infrastructure Investment Trusts or the InvIT route.

While under InvITs land assets are transferred to a trust offering investment opportunities to institutional investors, in the ToT model publicly funded projects that are operational for two years are auctioned.

What is the ToT model?

In 2016, the Cabinet Committee on Economic Affairs (CCEA) authorized the National Highway Authority of India (NHAI) to monetize publicly funded national highway projects and approved the ToT model. Under this model, projects financed by the State, operational for two years, are put out to tender, the right of collection and appropriation of the royalty being awarded for a predetermined concession period (30 years) to the concessionaires. (promoters or investors) against the initial payment. a lump sum to NHAI.

Why has the ToT model been implemented?

The government believes that the TOT model will provide an effective operations and maintenance (O&M) framework that would reduce NHAI’s involvement in projects after construction is complete.

The model will also help use the corpus (generated from the proceeds of monetization of this project) by the government to meet funding needs for the future development and operation and maintenance of the country’s highways, including in unsustainable geographic areas.

Another reason behind the launch of this model was to facilitate the efficient realization of tolls through the private sector and to create new business opportunities.


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