Highway Developers Call for Reformed BOT Model as NHAI Prepares ₹62,125 Crore Project Pipeline

Industry stakeholders have reportedly pressed the National Highways Authority of India (NHAI) to introduce significant amendments to the Build-Operate-Transfer (BOT) framework governing highway projects. The move was aimed at revitalizing private sector participation in infrastructure development across India, sources indicated.

According to reports, developers submitted multiple recommendations during a stakeholder consultation held recently in New Delhi. The proposals primarily focused on reducing investment risks and encouraging greater involvement from private players in highway infrastructure, particularly as NHAI gears up to award projects worth over ₹62,000 crore.

Industry Seeks Balanced Risk Distribution Framework

Representatives from the National Highways Builders Federation (NHBF) were said to have led discussions around restructuring termination payment mechanisms. They reportedly highlighted that the current system unfairly categorized demand-related revenue shortfalls as concessionaire defaults, which discouraged bidders from participating in BOT tenders.

The federation advocated for a framework that would distribute risk more equitably between the government and private developers, rather than burdening concessionaires with factors beyond their operational control. This proposal was seen as crucial to restoring confidence in the national infrastructure development model.

Technology-Driven Toll Monitoring Proposed

Another key recommendation from the NHBF involved the permanent integration of GNSS (Global Navigation Satellite System)-based toll collection systems. Industry experts believed this technology could bring uniformity to toll revenue assessments, enhance transparency, and minimize disputes arising from toll income shortfalls.

The satellite-based monitoring approach was positioned as a long-term solution to improve data reliability and standardize toll collection methodologies across highway projects nationwide.

Compensation Mechanism for Prolonged Project Delays

Developers were understood to have requested that prolongation costs be calculated as a percentage of the Total Project Cost (TPC). This measure, they argued, would ensure fair compensation for financing and holding expenses incurred during project delays—a recurring issue in large-scale infrastructure contracts.

The proposal aimed to address challenges faced by developers in managing extended investment cycles, which have historically dampened enthusiasm for infrastructure investment opportunities.

NHAI Plans Major BOT Project Awards

These industry recommendations came ahead of NHAI's announcement to award 12 highway projects spanning over 1,000 kilometers under the BOT model. The combined capital cost for these projects was estimated at approximately ₹62,125 crore.

Despite the BOT model's potential to attract private capital for building, operating, and eventually transferring highway assets back to the government, participation had reportedly declined in recent years due to high risk exposure and lengthy payback periods.

Infrastructure Experts Back Reform Agenda

Kuljit Singh, Partner and National Infrastructure Leader at EY India, was reported to have emphasized the urgent need for policy adjustments. He pointed out that BOT toll projects inherently carried traffic diversion risks and demanded substantial equity commitments from sponsors.

Singh reportedly suggested several measures to protect developers, including allowing up to 10% flexibility in concession periods, avoiding penalties for safety issues outside their control, and establishing clear pass-through mechanisms for government-mandated annual passes.

Declining Risk Appetite Among Bidders

Jagannarayan Padmanabhan, Senior Director and Global Head of Consulting at Crisil Intelligence, was said to have observed a marked decline in bidders' willingness to accept market-linked exposure. He indicated that this trend highlighted the necessity for improved risk-sharing arrangements between public authorities and private sector investors.

Toward a Next-Generation BOT Framework

With India's infrastructure expansion plans under programmes like Bharatmala and PM Gati Shakti gaining momentum, stakeholders believed that a restructured BOT model could play a pivotal role in attracting long-term capital. The revised framework was seen as essential for encouraging deeper private sector engagement in highway development.

As NHAI prepared to roll out its next round of BOT project tenders, industry observers were reportedly monitoring whether the government would respond with a more investor-friendly and balanced approach—potentially ushering in what some are calling a "BOT 2.0" era for Indian infrastructure.

Disclaimer: This news article is based on reports from industry sources and stakeholder meetings. While efforts have been made to ensure accuracy, readers are advised to verify information independently. The views and recommendations expressed by industry experts are attributed to them and do not necessarily reflect the official position of NHAI or the Government of India. Project timelines, costs, and policy decisions are subject to change based on official announcements.