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MoRTH Amends Model Concession Agreements for BOT and TOT Models

The Ministry of Road Transport and Highways (MoRTH) has made significant revisions to the Model Concession Agreement (MCA) for Capacity Augmentation on BOT model and for Monetization of Public Funded Operational National Highway Projects on Tolling, Operation, Maintenance, and Transfer (TOT) model.

 

Key changes in the BOT Model include:

  • Provision for construction support has been added, which will be disbursed in 10 equal installments over the Construction Period. This support will amount to the estimated toll revenue during the Construction Period, determined by the Authority, capped at a maximum of 40% of the Total Project Cost.
  • Provisions have been introduced for an extended tolling period to mitigate potential losses from competing roads.
  • The revised MCA provides clear guidelines on government compensation for force majeure events, including a termination payment clause if 40% of the project is completed during the construction phase. Additionally, provisions related to debt and equity have been revised to ensure alignment of project costs with the Authority’s projected total cost.
  • To further streamline project execution, authorities will have unrestricted access to view and download escrow account statements at any time during the concession period to prevent delays due to funding shortages.
  • Performance security can now be provided through various means such as Insurance Surety Bond issued by Insurance Companies authorized by the Insurance Regulatory and Development Authority of India, Account Payee Demand Draft, Banker’s Cheque, or e-Bank Guarantee. The performance security shall be calculated at 3% of the Estimated Project cost as specified in the RFP.
  • Lastly, a new provision has been added which allows the Authority to repurchase the Project through termination, providing a 90-day notice period and informing the Lenders’ Representative once the Project has achieved its specified capacity.

 

Key changes in the TOT model include:

  • Increase in the frequency of checks, from two to three times. This change ensures that any variations in toll collection are addressed promptly, and corresponding changes are made to the concession period.
  • Additionally, the threshold for checking has been reduced from 20% to 5%.

 

While the revisions to the model concession agreements (MCA) for TOT and BOT offer clarity on issues such as debt obligations, capacity expansion, and authority compensation. Yet, the impact of these amendments in bolstering BOT and TOT model remains to be seen.