Govt revises BOT guidelines, allows big funds to bid for highway projects

The Ministry of Road Transport and Highways MoRTH has allowed big funds and large investors to bid for build-operate-transfer BOT projects after some projects failed to attract private investments due to concerns over contract terms.

The Ministry of Road Transport and Highways (MoRTH) has allowed big funds and large investors to bid for build-operate-transfer (BOT) projects after some projects failed to attract private investments due to concerns over contract terms. Earlier, big funds were allowed to bid only for toll, operate and transfer (TOT) projects. The ministry has allowed sovereign wealth funds, infrastructure funds and pension funds, and private equity to bid for BOT projects under the public-private-partnership (PPP) model. In a modified request for proposal (RFP) document, MoRTH has relaxed norms for investments in such projects. The ministry came out with the modified framework after four highway projects worth Rs 22,000 crore failed to attract bids from private companies under the BOT model due to concerns over contract terms. National Highways are developed under different modes of execution, including BOT or toll, BOT (annuity), Engineering, Procurement and Construction (EPC), InvIT and Hybrid Annuity (HAM) model. Under the BOT mode, the government provides a concession period of 20-30 years to finance, build and operate highway projects. According to the modified RFP document, the bidder may be a natural person, private entity, government-owned entity, Alternative Investment Fund (AIF), Foreign Investment Fund or any combination of them with a formal intent to enter into a Joint Bidding Agreement to form a consortium. As per the document, institutional investors will be assessed on financial strength, while construction-related technical qualifications can be met through concessionaires or engineering partners hired after the project award.