TOT MODEL (Syllabus: GS Paper 3 – Economy)

News-CRUX-10     31st October 2023        

Context: The National Highways Authority of India (NHAI) recently awarded two highway monetisation projects worth Rs 6,584 in the toll, operate, and transfer (TOT) mode.

Toll Operate Transfer (TOT) Model

  • Background: In 2016, the Cabinet Committee on Economic Affairs (CCEA) granted authorization to the NHAI to monetize publicly funded national highway projects and approved the Toll-Operate-Transfer (ToT) model.
  • Criteria: Under the ToT model, operational public-funded projects with a minimum of two years of operation are put up for bidding.

o In this process, the right to collect and appropriate fees is assigned to concessionaires (developers or investors) for a predetermined concession period, typically 30 years, against an upfront payment to NHAI.

  • Assignment Based on Toll Revenue Potential: The assignment of rights is determined based on the toll revenue potential of the identified national highway projects.
  • Operation & Maintenance: The concessionaires are responsible for the operation and maintenance (O&M) of these projects throughout the concession period.
  • Encouraging Private Participation: The ToT model has been developed with the objective of encouraging greater private sector participation in the highway sector.