Government Highway Projects: Highway PPP projects opened to PE, pension and venture funds | India News
The road transport ministry has revised the bidding conditions for build-operate-transfer (toll) projects, as part of efforts to attract greater private investment in the sector. Officials said Alternative Investment Fund (AIF) and Foreign Investment Fund (FIF), with their deep pockets, would bring in better construction firms to execute projects, while ensuring better returns on investment in highway projects.Typically, these companies come with money from pension and infrastructure funds that provide long-term capital. It remains to be seen how much interest there is from the fund and how they structure the contracts.“The bidder may be a natural person, private entity, government-owned entity, AIF, FIF or any combination thereof with a formal intention to enter into a joint bidding agreement to form a consortium,” the amended bidding documents notified by the highways ministry said. Highway builders and construction companies will also continue to bid for such projects.The document also lays out separate criteria for evaluating bids submitted by alternative funders and traditional highway developers. For highway construction companies, eligibility will be assessed based on both technical and financial capabilities. However, only financial capacity will be considered for AIFs and FIFs. For these funds, the required financial capability threshold is set at twice the level prescribed for eligibility.“The concept of concessionaire in a BOT project is ideally an entity capable of arranging finance, hiring construction companies for execution and managing the highway stretch efficiently. It’s like filmmaking – a producer arranges the financing and brings together the right directors and actors to make a successful film. This change in norms will bring a big change and attract quality investment in this sector,” said an official.To ensure that alternative funds employ suitable construction companies, they must submit credentials of their proposed contractors for approval by the authorities. Contractors must meet the eligibility criteria specified in the bidding documents.
