the Centre plans to monetise several of its big-ticket infrastructure across sectors in the next five years under its Asset Monetisation Programme. Under this, it aims to generate ¹ 85,000 crore from the highways sector alone by 2024-25.
The government plans to monetize the roads and raise ¹ 85,000 crore until 2024-25
In order to generate funds to boost the economy, the Center plans to monetize several of its main infrastructures in various sectors over the next five years as part of its Asset Monetization Program. On this basis, it aims to generate Rs 85 billion in the road sector alone by 2024-25.
While around 10,250 crore of roads would be obtained in 2020-21 (although the target could not be met), the government plans to monetize ¹ 10,000 crore of roads in 2021-22. Similarly, for 2022-23 the goal is 20,000 crore, for 2023-24 the goal is to generate 20,000 crore through monetization, while for 2024-25 the goal is to generate ¹ 24,750 crore through monetization through of roads.
Between 2020-21 and January 31, 2021, the Ministry of Road Transport and Highways had managed to monetize 566 km of roads worth 5,011 crore through the ToT route.
The roads covered by this plan must be monetized through the Transfer of Toll Operation (ToT) or the Infrastructure Investment Trusts or the InvIT route.
While under InvIT, land assets are transferred to a trust that provides investment opportunities for institutional investors, in the ToT model, government-funded projects that are operational for two years are put up for sale.
What is the ToT model?
In 2016, the Cabinet Committee on Economic Affairs (CCEA) authorized the National Highway Authority of India (NHAI) to monetize government-funded national highway projects and approved the ToT model. Under this model, projects financed with public funds with a duration of two years will be tendered, where the right to collect and appropriate the rate for a predetermined concession period (30 years) is assigned to the concessionaires (developers or investors) through the advance payment of a lump sum to NHAI.
Why has the ToT model been implemented?
The government believes that the TOT model will provide an efficient operation and maintenance framework that would reduce NHAI's involvement in projects after construction is complete.
The model will also help the government use the corpus (generated from the proceeds of the monetization of the project) to meet financing requirements for future highway development and operation and maintenance in the country, even in unviable geographic areas. .
Comments Another reason for launching this model was to allow efficient tolling through the private sector and create new business opportunities.
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