An infrastructure investment trust (InvIT) formed by private equity firm KKR & Co has won a government contract for a 252-km stretch of highways after it emerged as the highest bidder with a Rs 6,661 crore ($797 million) offer.
The National Highways Authority of India (NHAI), the government’s nodal agency for highways in the country, has awarded the contract to KKR-sponsored Highways Infrastructure Trust (HIT). The InvIT won the contract for a stretch on the Hyderabad-Nagpur corridor in the southern state of Telangana.
HIT beat several well-entrenched competitors in the Indian highways space, including Adani Road Transport, IRB Infrastructure and I Squared Capital-backed Cube Highways, who were among the bidders.
The NHAI said in a statement that it monetised the asset through the toll-operate-transfer (TOT) mode. The concession period of the TOT bundle is for 20 years. HIT will be required to maintain and operate the stretch during this period. In lieu of this, HIT will collect and retain the user fee for the stretch in accordance with prescribed fee rates, the NHAI said.
The Indian government developed the TOT model to encourage private participation in the highway sector. The NHAI has awarded contracts for tolling, operation and maintenance of various National Highway stretches on TOT basis. In 2023-24, it awarded four TOT bundles worth Rs 15,968 crores against the monetization target of Rs 10,000 crore.
The NHAI also said that, in line with the government’s National Monetization Plan, its total asset monetization has crossed Rs 1 trillion. This includes Rs 48,995 crore through TOT projects, Rs 25,900 crore by setting up its own InvIT, and Rs 42,000 crore through securitization, the agency said.
“The success rate of TOT mode in FY24 was 100% and we have seen very encouraging response from the bidders. The Government of India has been very supportive to achieve the National Monetization targets, and we are committed to work towards realizing this vision,” NHAI chairman Santosh Kumar Yadav said.
