Indian developers beat foreign rivals to win highway auctions

India’sAdani Enterprises and DP Jain & Co. Infrastructure have emerged the highestbidders to toll two stretches of roads in Gujarat state in the Toll-Operate-Transfer(TOT) model, according to Inframation News. Adani bid `10.11-bn(US$139-mn) for a 53.6km stretch while DP Jain proposed `12.51-bn for a 105.9km project, edging outCanadian pension fund Caisse de dépôt et placement du Québec (CDPQ),Singapore-based Cube Highways and Infrastructure as well as local developersIRB Infrastructure and Prakash Asphalting’s and Tollways.

Bothstretches are between the Palanpur and Samkhiyali municipalities, each carrying20-year concessions. The combined bid value – totalling more than `20-bn – is higher than the combined reserveprice of about `15-bn thatwas estimated by the procuring authority, the National Highways Authority ofIndia (NHAI), according to the news source.

NHAI isexpected to reveal its own estimates of the reserve price to the bidders, thesource added.

Last year,India’s Ministry of Road Transport and Highways decided to withhold the Floorprice information for TOT highway auctions, giving itself elbow room to awardprojects even if bids fall below its expectations. The decision was taken aftertwo auctions – in December 2018 and November 2019 – drew tepid response frominvestors, with the first being cancelled after CubeHighways' `46.12-bnbid turned out to be 14 per cent lower than the NHAI’s expected value. In thesecond auction, the highest bid that the NHAI received was only marginally morethan its own estimate.

In the TOTmodel, the investor pays an upfront fee in exchange for a concession and takesresponsibility for operating and maintaining the assets.

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