Newz Desk, Durgapur: Aimed at reviving private sector interest in highway development, the central government is preparing to roll out a new set of contract norms that significantly reduce investment risks for concessionaires and lenders. The revised framework—expected to be notified within this month—seeks to make Build-Operate-Transfer (BOT-Toll) projects more attractive by addressing long-standing concerns around traffic volatility and financial exposure.
According to officials, the reforms centre on demand-related risks, which remain the biggest uncertainty in toll-based highway projects. Under the new mechanism, annual target traffic levels will be clearly defined from the date of scheduled completion up to the seventh year of operations. If actual traffic dips more than 10% below projections in this period, the government will step in with revenue support to compensate the shortfall.
Beyond the seventh year, the system shifts to a flexible concession model. A yearly traffic shortfall of over 10% would trigger an extension of the tolling period—one percent for every additional one percent dip, subject to a cap of 10%. On the flip side, if vehicle volumes exceed projections by more than 10%, the concessionaire will have to forgo part of the tolling tenure.
The proposals also allow lenders or concessionaires to seek contract termination if traffic falls more than 20% below estimates. To ensure financial stability, the government has suggested a structured termination pa
yment, provided project progress has crossed the 20% milestone. Contracts terminated at an earlier stage, however, will not be eligible for such payouts.
In a further move to de-risk high-performing stretches, the norms introduce a buyback option for projects where traffic consistently surpasses designed capacity.
Officials believe the revamped rules will help restore confidence among private developers, whose participation in BOT projects has sharply declined in recent years due to financial uncertainties and traffic-related risks. TNN
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