HYDERABAD: Categorically refuting allegations levelled by the Opposition of “underhand deals” in the leasing out of Nehru Outer Ring Road (ORR) to IRB Infrastructure Developers Ltd, MAUD Special Chief Secretary Arvind Kumar on Wednesday said that the entire process was done in an “open and transparent” manner by inviting global tenders.
He, however, was reluctant to share details of the base price declared for bidding, saying that the tender process wasn’t yet completed.
The HMDA recently awarded the lease of the ORR - a 158-km eight-lane access-controlled expressway encircling Hyderabad to IRB Infra for a period of 30 years through a Toll-Operate-Transfer (TOT) basis by inviting global tenders. However, the Opposition parties have raised many questions ranging from revenue loss to the State to the point of time to carry out the tender. The authorities have taken traffic projections for the first five years and estimated that there will be a 4% to 5% increase in the initial years.
According to officials, Adani Road Transport Limited, Eagle Infra India Limited, Dinesh Chandra R Agrawal Infracon Private Ltd., and Gawar Construction Limited were among the bidders. Currently, an average of 1.65 lakh vehicles ply on the ORR daily, fetching an average revenue of Rs 1.48 crore.
Speaking at a press conference convened to “clarify the official position” on the process and stages involved in awarding the tender to IRB Infra, which was once deemed a defaulter by the same HMDA, Arvind Kumar said that the TOT process, which has been regularly practised by NHAI after the approval of the Cabinet Committee on Economic Affairs of the Government of India, was adopted to award the tender.
“We are following the same method followed by the NHAI. In this TOT model, the owner or authority directly passes the process of toll collection and maintenance of certain roads through a private concessionary party. The ownership of the ORR will remain with the government throughout the period,” he said. He added that the concessionaire will be reviewed once every 10 years to calculate actual revenue realisation by the concessionaire.
Answering a question on the guarantees undertaken by a private toll concessionaire who was once a defaulter, Arvind Kumar said that the contract will be awarded only after upfront payment of the entire lump sum amount of Rs 7,380 crore to the authority.
Shedding light on the process adopted to calculate the revenues, he said that it is wrongly speculated in the media that the ORR, which is now collecting Rs 550 crore per annum, has been leased out at Rs 240 crore per annum. Arvind Kumar said that they appraised the value as net present value by excluding the annual expenditure spent on road maintenance, salaries, and administration.
For calculating concession value, a committee comprising himself and the Special Chief Secretary, Finance, Industries and other officials decided to adopt the Initial Estimated Concession Value (IECV) method, which is generally accepted practice, he said.
“Accordingly, and through a process of an open bid, M/s Mazars Advisory LLP, a France-based consulting firm was selected as ‘Transaction Advisors’ in October 2022 for the said project based on a detailed QCBS-based tendering process. Mazars is empanelled as Transaction Advisors by the Department of Economic Affairs, GoI, for undertaking PPP projects in India,” Arvind Kumar said.
Quelling apprehensions on the possibility of private operators increasing the toll as per their whims, he said that the State government notified the ‘ORR Toll Policy’ in 2012 in line with the ‘NHAI Toll Fee Rules 2008’ which is the basis for determining toll and its annual increase.“The concessionaire will send proposals to authorities if they want to increase the toll. It can be revised only with the approval of the authority,” he said.
To the point
Lease value appraised as net present value by excluding annual expenditure
The initial Estimated Concession Value method adopted
ORR Toll Policy- 2012 will prevent IRB inform from hiking tolls indiscriminately