Deals

Telangana to kick-start India’s road privatisations

The region is looking to roll out the first state-level asset recycling scheme, while the National Highways Authority is expecting bids for a package of roads next month.

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The state government of Telangana in India became the first to carry out a toll road privatisation through the “toll-operate-transfer” model.

State firm Hyderabad Growth Corridor has started the process to privatise the Nehru Outer Ring Road, a 158km toll road which cost 66.96 billion rupees ($1.05 billion; €880 million) to build in 2008, under the TOT model. It also appointed a consortium of LEA Associates South Asia and CRISIL Risk & Infrastructure Solutions as transaction advisors.

“This is the first TOT initiative being undertaken by a state, and would set the pace for asset recycling as recommended by the Kelkar Committee on public-private partnerships,” said Indian rating agency CRISIL.

Meanwhile, the Ministry of Road Transport & Highways and the National Highways Authority of India are expecting bids for the first TOT bundle of national highways next month. Last June, they proposed to consider privatisation of a package of roads to raise $1 billion.

The deal is expected to “generate significant interest among investors – both Indian and international, including sovereign wealth funds, infrastructure investment funds and road developers – due to its location, minimum risks of construction, land acquisition, environmental clearances, and known traffic flow for the past few years”, said CRISIL, the Indian rating agency and advisory firm.

“The Nehru Outer Ring Road TOT project will be watched closely, as it will show other states the way forward on asset recycling,” said Jagannarayan Padmanabhan, practice lead and director of transport and logistics at CRIS.