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Cabinet makes key changes to TOT framework, allows NHAI to raise funds against toll revenue

Among key changes, the NHAI has been allowed to vary the concession period of toll projects between 15 to 30 years. TOT was introduced in 2016 to monetise publicly funded highways. Under the model, investors make a one-time lump sum payment in return for long-term toll collection rights of 30 years.

, ET Bureau|
Nov 20, 2019, 11.22 PM IST
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NHAI has also been allowed to raise long-term financing from banks against toll receipts, the exercise commonly known as toll securitisation.
NEW DELHI: The cabinet on Wednesday approved a slew of measures to make monetisation of road assets more investor friendly, as the government gets cracking on raising funds through asset recycling.

Among key changes, the National highways authority of India (NHAI) has been allowed to vary the concession period of toll projects between 15 to 30 years.

TOT was introduced in 2016 to monetise publicly funded highways. Under the model, investors make a one-time lump sum payment in return for long-term toll collection rights of 30 years.

The move was being considered to attract a wider range of investors, including smaller ones. NHAI is expected to offer 15,000 km of road stretches for monetisation by 2024-25.

The concession period has now been made flexible, depending on the ‘features of the project,’ Finance Minister Nirmala Sitharaman said at a cabinet briefing.

NHAI has also been allowed to raise long-term financing from banks against toll receipts, the exercise commonly known as toll securitisation.

“We now authorise NHAI to raise long term finance by securitising the user-fee receipts from fee plazas as an alternative mode of asset monetisation,” Sitharaman said.

ET first reported on July 23rd that the authority was in talks with lenders like State Bank of India (SBI) for raising log-term finances against toll collection.

Union minister of road transport and highways Nitin Gadkari has been promoting the idea, as an innovative mode of raising funds for the highway building authority.

Going forward, the NHAI board is now allowed to make approvals to TOT projects, including the proposed stretches, concession period and concession value of the bundle, Sitharaman said.

The Cabinet committee on Economic Affairs (CCEA) also approved monetisation of publicly-funded highways one year after they are operational and collecting toll instead of the earlier criteria of minimum two years of operation.
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