The work for these operational national highways across Odisha, West Bengal, Bihar, Uttar Pradesh, Rajasthan, Gujarat, Tamil Nadu and Telangana comes even as NHAI is preparing to auction roads totalling 648km for around $1 billion. The tender is expected to open on 23 February.

“While the bid process is on for the first bundle, work has started to monetize the subsequent three bundles. The second bundle will comprise around 480km in the states of Odisha, West Bengal and Bihar. While the third bundle comprising around 565km is in the states of Rajasthan, Gujarat, Tamil Nadu and Telangana, the fourth bundle totalling 675km is in Uttar Pradesh and Bihar,” said the person cited above.

Under this model, the right to collect toll on selected national highway stretches that have been built through public funding is proposed to be assigned for a 30-year period to investors against an upfront payment of a lump-sum amount to the government. During the tenure of the contract, the operation and maintenance would be the responsibility of the developer.

“Bundle II and III are in the finalization stage. We are targeting to float Bundle II by March-end,” said NHAI chairman Deepak Kumar.

The cabinet committee on economic affairs in 2016 authorized NHAI to monetize 75 public-funded national highways with a road length of around 4,500km, which together can fetch around Rs1 trillion. The TOT model will help NHAI raise upfront capital to fund road projects based on the engineering, procurement and construction and hybrid-annuity models.

This comes at a time when India will face a $526 billion infrastructure investment gap by 2040, according to the latest Economic Survey presented in January. With India working on an ambitious plan to bankroll a new integrated infrastructure programme that involves building roads, railways, waterways, power grids and urban infrastructure, finance minister Arun Jaitley earmarked Rs5.97 trillion towards infrastructure sector outlay in the 2018-19 annual budget. Starting with an allocation of around Rs1.81 trillion in 2014-15, the budget share of infrastructure reached Rs3.96 trillion in 2017-18.

Experts say that as mergers and acquisitions have been completed on most projects with good operational history, there is a slowdown in transactions.

“Hence, the market will have a strong appetite for new TOT bids. However, the likely bidders are likely to be the same as those in the current auction. This is because the TOT model is primarily a financial play compared to the other PPP (public-private-partnership) models adopted by NHAI. The bids depend on only three factors—traffic projections, O&M (operations and maintenance) cost, and the financing plan. While traffic and O&M will need a detailed due diligence, it will be financial engineering and cost of capital that will determine the winning bidder,” said Srishti Ahuja Taneja, director, transaction advisory services at EY.

While presenting the budget earlier this month, Jaitley said the road ministry should continue to monetize its road assets through the TOT model.

Mint reported on 4 August 2017 about at least a dozen investors showing interest in the first tranche under the TOT model. The plan has generated interest from the likes of Abu Dhabi Investment Authority, Singapore’s sovereign wealth fund GIC Pte. Ltd, Singapore’s state-run investment firm Temasek Holdings Pte. Ltd, Hastings Funds Management Ltd, Keppel Infrastructure Fund Management Pte. Ltd, Mizuho Asia Infra Capital, Macquarie Group Ltd, Morgan Stanley Infrastructure Inc., Equirus Capital Pte. Ltd, I Squared Capital Advisors LLC, JP Morgan Asset Management Inc., and Infrastructure Leasing & Financial Services Ltd.

Infrastructure development has been one of the focus areas of the Narendra Modi government, with India working towards securing funds for ambitious plans such as Sagarmala (ports) and Bharatmala (roads) to improve the nation’s transport infrastructure.