The Ministry of Road Transport and Highways (MoRTH) has revised bidding rules to allow large institutional investors, including sovereign wealth funds, pension funds and private equity firms, to participate in build-operate-transfer (BOT) highway projects under the public-private-partnership (PPP) model.
The decision follows weak private sector response to several highway projects under the BOT model. Four projects worth around Rs 22,000 crore reportedly failed to attract bids amid concerns over contract terms and project risks.
Under the revised request for proposal (RFP) framework, entities such as infrastructure funds, Alternative Investment Funds (AIFs) and foreign investment funds can now bid directly for BOT projects either independently or through consortiums. Earlier, such investors were primarily permitted to participate in toll-operate-transfer (TOT) projects.
The modified norms also ease technical qualification requirements for institutional investors. While bidders will continue to be assessed on financial strength, construction-related expertise can now be met through concessionaires or engineering partners appointed after project award.
The ministry expects the changes to widen the investor base and improve private capital flow into the highway sector.
National highways are developed through various models, including BOT (Toll), BOT (Annuity), Engineering, Procurement and Construction (EPC), Hybrid Annuity Model (HAM) and Infrastructure Investment Trusts (InvITs).
Under the BOT model, private entities finance, construct and operate highway projects for a concession period of 20 to 30 years, recovering investments through toll collections.
