2. Category of Roads Authorities
responsible
National Highways Central Government
(through Ministry of Road
Transport and Highways)
State Highways and Major
Highways
State Governments (PWDs)
Rural Roads and Urban
Roads
Rural Engineering Organisations,
Local Authorities like Panchayats
and Municipalities
Roads

3. Introduction
• India has an extensive road network of 4.24 million
km– the second largest in the world.
• It is estimated that more than 70 per cent of freight
and 85 per cent of passenger traffic in the country is
being handled by roads.
• More than 60 percent of the estimated investment
requirement is expected to be privately financed.
• The number of vehicles on roads has been growing
at compounded annual growth rate (CAGR) of
approximately 8%in the last five years
• The National Highways Authority of India (NHAI) is
mandated to implement the NHDP.

4. CURRENT SCENARIO
• The National Highways have a total length of
70,934 km and serve as the arterial road
network of the country.
• The development of National Highways is the
responsibility of the Government of India.

5. • The Government of India has launched major
initiatives to upgrade and strengthen National
Highways through various phases of the
National Highways Development Project
(NHDP).
• NHDP is one of the largest road development
programmes to be undertaken by a single
authority in the world and involves widening,
upgrading and rehabilitation of about 54,000
km, entailing an estimated investment of
more than INR 3,00,000 Crore (USD 60 billion).

7. Phases
• Phase I mainly involves widening (to 4 lanes) and
upgrading of 7,498 km of the national highway
network.
• Phase-II involves widening and improvement of the NS-
EW corridors covering a distance of 6,647 km.
• NHDP-III involves upgradation of 12,109 km (mainly 4-
laning) of high density national highways, through the
Build, Operate & Transfer (BOT) mode at a cost of INR
80,626 Crore (USD 16.1 billion).
• NHDP-IV envisages upgrading of 20,000 km of such
highways into 2-lane highways, at an indicative cost of
INR 27,800 Crore (USD 5.6 billion).

8. • Under NHDP-V, 6-laning of the 4-lane highways
comprising the GQ and certain other high density
stretches, will be implemented on BOT basis at an
estimated cost of INR 41,210 Crore (USD 8.2 billion).
• Under NHDP-VI, The Government has approved 1,000
km of expressways to be developed on a BOT basis, at
an indicative cost of INR 16,680 Crore (USD 3.3 billion).
• Under NHDP-VII, The development of ring roads,
bypasses, grade separators and service roads. For this,
a programme for development of such features at an
indicative cost of INR 16,680 Crore (USD 3.3 billion) has
been approved by the Government.

10. Financing National Highway Projects
1. Government's Gross Budgetary Support (GBS) and
Additional Budgetary Support (ABS)
2. Dedicated accruals under the Central Road Fund
(share in the levy of cess on fuel)
3. Lending by international institutions (World Bank,
ADB, JBIC)
4. Private financing under PPP frameworks
5. Market Borrowings (including funds raised through
Capital Gain Tax Exemption Bonds under section 54
EC of Income Tax Act)

14. Association of State Road Transport
Undertakings

15. PPP in Highway Development
The common forms of PPP that are popular in India and
have been used for development of National Highways
are:
• Build, Operate and Transfer (Toll) Model on DBFOT basis
• Build, Operate and Transfer (Annuity) Mode on DBFOT
basis
• Special Purpose Vehicle (SPV) for Port Connectivity
Projects
• NHAI is also proposing to award projects under a long
term Operations, Maintenance and Transfer (OMT)
concession.

16. • Most of the projects have been developed or are
under development on
o Public Private Partnership (PPP) basis through Build
Operate and Transfer (BOT)-Annuity and Build
Operate and Transfer (BOT)-Toll mode.
o Typically, in an annuity project, the project IRR is
expected to be 12-14% and equity IRR would be 14
-16%.
o For toll projects, where the concessionaire assumes
the traffic risk, the project IRR is expected to be
around 14-16% and equity IRR around 18-20%.

19. BOT (Toll)
• Private developers/ operators, who invest in
tollable highway projects, are entitled to collect
and retain toll revenues for the tenure of the
project concession period.
• The tolls are prescribed by NHAI on a per vehicle
per km basis for different types of vehicles.
• A Model Concession Agreement (MCA) has been
developed to facilitate speedy award of contracts.
• This framework has been successfully used for
award of BOT concessions. The MCA has been
revised recently and current projects are being
awarded under the revised MCA

20. BOT (Annuity)
• The concessionaire bids for annuity payments
from NHAI that would cover his cost
(construction, operations and maintenance) and
an expected return on the investment.
• The bidder quoting the lowest annuity is awarded
the project.
• The annuities are paid semi-annually by NHAI to
the concessionaire and linked to performance
covenants.
• The concessionaire does not bear the traffic/
tolling risk in these contracts.

21. Operate, Maintain and Transfer
Concession
• NHAI has recently taken up award of select highway
projects to private sector players under an OMT
Concession.
• Till recently, the tasks of toll collection and highway
maintenance were entrusted with tolling agents/
operators and subcontractors, respectively. These tasks
have been integrated under the OMT concession.
• Under the concession private operators would be
eligible to collect tolls on these stretches for
maintaining highways and providing essential services
(such as emergency/ safety services).

22. Special Purpose Vehicle for Port Connectivity
Projects
• NHAI has also taken up development of port
connectivity projects by setting up Special Purpose
Vehicles (SPVs) wherein NHAI contributes upto 30% of
the project cost as equity.
• The SPVs also have equity participation by port trusts,
State Governments or their representative entities.
• The SPVs also raise loans for financing the projects
• SPVs are authorised to collect user fee on the
developed stretches to cover repayment of debts and
for meeting the costs of operations and maintenance.

24. Bidding Projects
Projects are awarded as per the model documents-
• Request for Qualification (RFQ), Request for
Proposal (RFP) and Concession Agreement -
provided by the Ministry of Finance. NHAI amends
the model documents based on project specific
requirements.
• Stage 1: Pre-qualification on the basis of Technical
and Financial expertise of the firm and criteria set
out in the RFQ Document.
• Stage 2: Commercial bids from pre-qualified bidders
are invited through issue of RFP.

25. Process and Its Validity
• PROCESS
1. Completion of the preparatory works as outlines in
guidelines for the identified projects.
2. Finalisation of Bidding Documents.
3. Invitation of Bids.
4. Pre-bid Conference.
5. Evaluation of bids.
6. Awards of concession.
7. Signing of the Agreement.
• BID VALIDITY
The bids shall remain valid for a period up to and
including the date 180 (one hundred and eighty)
days from the last date of submission of bids.

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