Some of the key provisions introduced include a buyback option, revenue support for concessionaires and traffic-risk sharing between concessionaires and the government, making BOT projects more bankable and attractive to the private sector.
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In an office memorandum dated August 10, the Ministry of Road Transport and Highways said the revised Model Concession Agreement (MCA) had been prepared following the recommendations of an inter-ministerial committee formed to address the challenges faced by various stakeholders in BOT projects.
Experts said the revised MCA will provide revenue support to concessionaires if traffic falls more than 10% below the target for the first seven target dates. While this will come with a defined cap, it is expected to provide early-stage cash-flow protection to concessionaires and improve project bankability.
Besides, it provides a clear exit mechanism for successful assets, as the government will now buy back a project if traffic reaches the prescribed design capacity for two years within a three-year period.
“The revised BOT (Toll) MCA materially improves the risk-return proposition for private developers. Revenue support cushions initial traffic downside, concession-period adjustments provide longer-term protection, while the capacity-linked buyback creates a clear exit for successful projects,” Jagannarayan Padmanabhan, senior director and global head, consulting, at Crisil Intelligence, said.“Together, these provisions should make BOT (Toll) significantly more bankable and could bring private and institutional capital back into the highway PPP market,” he added.
The revised MCA also provides for traffic-risk sharing through concession-period adjustments, as traffic underperformance beyond the initial support period can result in an extension of the concession period, while significant outperformance can reduce it.
“One of the interesting concepts is the provision for multiple target traffic triggers, which provides greater protection to investors against variations between actual and forecast traffic,” Kuljit Singh, partner and national infrastructure leader at EY India, said.
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“This could make BOT projects less risky and provide a degree of protection against traffic diversion, including due to newer competing roads being developed in India,” Singh added.
The National Highways Authority of India (NHAI) has identified 54 projects with a total capital cost of Rs 1,80,017 crore, spanning 2,442 km, that it plans to award in 2026-27.
Of these, it anticipates awarding only seven projects under the build-operate-transfer (BOT) model, while 26 projects will be awarded under the engineering, procurement and construction (EPC) mode and 21 under the hybrid annuity model (HAM), as there was a muted response to BOT projects under the earlier MCA.