Highway Monetisation Target to Get ₹20,000 Crore Boost from BoT Model Rethink; FY27 Target May Surpass ₹35,000 Crore

The Ministry of Road Transport and Highways is considering raising its FY27 highway monetisation target by ₹15,000-20,000 crore by involving private investment through build-operate-transfer (BoT) projects, as per The Mint report.  

Under this approach, private investments in highway construction are recognised as a form of monetisation, aiming to surpass the current target of ₹35,000 crore and align with the government's National Monetisation Pipeline (NMP) 2.0 framework as per Bloomberg news report. 

New Approach to Highway Monetisation 

The government's revised strategy plans to recognise investments sourced from the BoT model as contributions towards highway monetisation. Previously, highway monetisation primarily involved transferring revenue rights from already-built roads.  

The inclusion of BoT projects as a monetisation tool aims to relieve the government of capital burdens and attract private sector investments into public infrastructure projects. 

Investment Plans and Targets 

The Ministry aims to award approximately 10,000 km of national highways in FY27. Out of this, about 25% is expected to be under the BoT model, with projects valuing nearly ₹2 trillion.  

However, the monetisation contributions for FY27 are anticipated to be between ₹15,000-20,000 crore, dependant on the pace in which these investments are realised during the financial year. 

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Revisiting the BoT Model 

Once dominant between 2007 and 2014, the BoT model saw a decline due to factors like aggressive bidding and traffic concerns. However, the model is expected to experience a resurgence with renewed focus and refined concession agreements aimed at improving bankability and risk allocation.  

The government seeks to increase private capital in infrastructure, viewing this model as vital in reducing dependency on budgetary support. 

Continued Efforts Through ToT and InvITs 

In addition to the BoT model, the Ministry will continue its monetisation efforts through Toll-Operate-Transfer (ToT) bundles and Infrastructure Investment Trusts (InvITs).  

These efforts are likely to match or exceed previous levels, inviting both domestic and international capital for the long term. This dual approach underlines the Ministry's commitment to diversifying methods to secure funding and construction for highway projects. 

Conclusion 

The Ministry of Road Transport and Highways has prepared to boost its monetisation goals by ₹15,000-20,000 crore in FY27 through the inclusion of private investments from BoT projects. With expected highway awards valuing around ₹2 trillion and relying on both ToT and InvITs, the Ministry is targeting a collection exceeding ₹50,000 crore. 

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