BOT IS BACK

THERE HAS BEEN A 60% EXPANSION IN THE NATIONAL HIGHWAY NETWORK IN THE LAST DECADE, BUT PRIVATE INVESTMENTS HAVE BEEN ABSENT. HOWEVER, WINDS OF CHANGE ARE BLOWING WITH THE PRIVATE PLAYERS FLOCKING TO BOT (BUILD, OPERATE, TRANSFER) PROJECTS AGAIN

-  RICHA SHARMA

IT CAME CRASHING down about 10 years ago. Once the most sought-after format for highway construction, projects under the BOT (Build-Operate-Transfer) Toll model—that were constructed completely by private players—nosedived from 96% of awards in 2012 to zero just seven years later in 2019.

And there it has languished since, rising a tad to 3-5% till FY23 before it collapsed to zero again in FY24, bogged down by the burden of the glory years of 2006-13, when money was cheap, private sector enthusiasm was high, traffic projections were optimistic, and the government was keen to build miles and miles of roads. But when the dust settled, those private players were left to grapple with high debt burdens, higher land acquisition costs, costly litigation, low traffic and lower toll collections, and ever-increasing timelines. Big players like HCC, Gammon, and IVRCL were caught in a debt trap, and others have been hesitant to enter the BOT arena as a result.

Instead, there was a shift to-wards EPC (engineering, procurement, and construction) and HAM (hybrid annuity model) projects. In EPC, the National Highways Authority of India (NHAI) handles everything from acquiring land to getting project clearance, etc. In HAM, introduced to boost the waning interest of private players, the government fronts 40% of the project cost, and the awardee has to raise the rest of the amount. The government pays the remaining amount in annuity mode over the period of operation—the private players have no right to collect a toll.