Published On: Wed, Jun 14th, 2017

MEP Infra in Talks with Korean, Chinese, Japanese Firms for JVs

MEP Infrastructure Developers Ltd, a road toll management company to bid for road projects under the hybrid annuity model (HAM) in India is in talks with infrastructure company from  South Korean, Chinese and Japanese to form joint ventures, said  managing director Jayant Mhaiskar.

Under the new bids that will come up (for HAM), they are spoilt for choice as they have Chinese, Korean, and Japanese construction firms wanting to partner with them. They have multiple companies showing interest, Mhaiskar said.

Under HAM, the government commits up to 40 percent of the project cost over a period and hands the project to the developer, who funds the balance with debt and equity, and is paid annuity income in installments.

MEP Infra has, over the past year, won six HAM projects along with the Indian unit of its Spanish joint venture partner Sanjose India Infrastructure and Construction Pvt. Ltd. In the upcoming HAM projects, it plans to form ventures with other overseas firms that can help with capital.

The company is also in talks with two large overseas funds to form a joint venture to bid for projects under the new toll-operate-transfer (TOT) model, where the government plans to auction operating toll-based projects through international competitive bidding.

Under the TOT model approved last year, toll highways operated by the National Highways Authority of India (NHAI) for over two years will be leased out to entities which will collect toll and operate the project for a specified duration, in return for a fee. The money raised will be used to invest in developing more highways.

Mhaiskar said that operating projects in different geographies is not a concern; they have the wherewithal. As far as capital is concerned, that is one important aspect to consider when projects are bid. Under TOT or HAM, they need certain amount of capital.

The partnership with overseas infrastructure companies will give MEP a foot in the door of the Indian roads market.

Last year, Spanish infrastructure firm Abertis Infraestructuras SA agreed to buy two operational toll road assets in south India from Macquarie Group Ltd to enter the high-growth Indian infrastructure market.

Last fiscal, the government could not meet its target of awarding 25,000km of road projects. As a result, there is a large pipeline of road projects to be awarded under the HAM and engineering, procurement and construction (EPC) models this fiscal. MEP itself is planning to bid for about 6,500km of road projects under HAM.

MEP Infrastructure is largely into two areas of business—toll collection and operation-maintenance-transfer (OMT) of roads. It operates over 30 toll plazas on national highways.

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