Mumbai, Jan 8 (PTI) Unlike the built-operate-transfer(BOT) or the hybrid annuity models (HAM), the bidding fortoll-operate-transfer (TOT) projects will be more competitivethan agressive even as they pose funding and refinancingrisks, says India Ratings (Ind-Ra)."TOT projects would be more competitive than those onBOT or HAM models since most of the assets under the firstbundle are parts of the Golden Quadrilateral and have avintage of over 10 years," the agency said in a recent report.According to Ind-Ra, the bids would be morecompetitive with less variance, since six out of nineassets to be bid under the TOT model are part of the GoldenQuadrilateral and the other three are in industrial clusters.More than 50 per cent of assets have an averagevintage of 10 years, enabling bidders to bid based on actualtoll collections, routine operations and major maintenanceexpenses, it said"The bulky-bid would crowd out the non-serious biddersand smaller sponsors who may not be able to sustain operationsand maintenance over a longer term," it added.The agency further said TOT projects may find itdifficult to tie up debt, as the debt tenor in India istypically 10-15 years."Also, such projects pose a huge refinancing risk, asthe initial concession period is 30 years. Furthermore, thelong concession period makes the initial estimated concessionvalue (IECV) bulky, requiring large debt and consequentlylarge interest payments. This would be a burden on the bidderduring initial years until the project achieves significantramp up in revenues," it said.Ind-Ra, however, believes a reduction in theconcession period by five to seven years would bring downIECV, thus lowering the quantum of interest payments duringinitial years.Ind-Ra noted that investors and lenders will have to be a little cautious on this model for the first bundle of projects, so as to structure the debt in such a way that in initial years the return on equity is higher before debt payment.

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