The Union Ministry of Road Transport and Highways will ask for bids from foreign pension funds for recycling of brown-field projects to raise funds.
The Cabinet had accepted the proposal last month. There is a requirement for model agreement after which the Request For Proposal (RFP) will be finalised. The projects which are modified or upgraded are called brown-field projects.
Rohit Kumar Singh, the Joint Secretary with the Ministry of Road Transport and Highways said on the sidelines of infrastructure summit by Bengal Chambers.
The joint secretary further said, once the RFP was ready, bids would be invited. The Centre is expecting to invite bids in the next two or three months. The process involves handing over of 75-odd Brown-field road projects across the country to these foreign funds for a concession period of 30 years.
Minister of Road Transport, Highways and Shipping Nitin Gadkari along with his officers will visit many countries to invite bid for this.
“The ownership would not be transferred, but the foreign funds would collect toll as per law and maintain the property,” Singh said.
Singh said in this way, the government was expected to gain Rs 50,000 crore which would be given to the fund managers and would be then used in creating other new road assets.
This process is called asset recycling. An asset is “recycled” when a government, corporation or bank either sells or borrows against its physical assets to get money for investment in new capital.
“This mechanism of called asset recycling which is quite popular in other countries like Australia,” he said.
Singh also said these kind of financing, spread over a long period of 30 years, is provided by pension fund managers from Saudi, Qatar, UAE and Abu Dhabi Investment Authority among others.
“The USA pension fund is much different from Canada pension fund. We are expecting pension funds managers from Canada, Singapore and US to respond to the offer,” he said.
The Ministry had already taken of Rs 10,000 crore from the Employees’ Provident Fund Organisation (EPFO) as well.