The Ministry of Road Transport and Highways ("MoRTH"), on March 15, 2024, announced amendments to the model concession agreement for Tolling Operation Transfer projects. The summary of the amendments are as follows:
- in terms of the provision dealing with variations in toll collection at various target points i.e., specific points of time during the concession period where the actual fee collection is benchmarked with the targeted fee collection, Target Point 2 is revised from 2037 to 2035. Additionally, a new target point i.e., Target Point 3 is introduced in the model concession agreement;
- the provisions dealing with variation in the concession period due to variation in the target fee collected at each target point have been substantially revised. As per the amended provisions, in case the actual fee collected is 5% lower than the target fee for a particular target point, then for every 1% shortfall over and above the 5% threshold, then the remaining concession period as on the date of target point, the concession period is increased by 1%. Further, in case the shortfall in actual fee is a fraction of 1% (beyond the 5% variation threshold), then the remaining concession period will increase on pro-rata basis. Similarly, in such a scenario, the target fee for the subsequent target point is decreased by the same percentage. A similar provision and mechanism have been included in case the actual fee collected is 5% higher than the target fee for a particular target point with the difference being that in this scenario, the concession period is decreased and the target fee for the subsequent target point is increased;
- the key change from the previous draft of the model concession agreement is that in the erstwhile draft the trigger event for change in the concession period was: (a) for Target Point 1, the actual fee would have to fall short or exceed by 20% of the target fee; and (b) for Target Point 2, the actual fee would have to fall short or exceed by 30% of the target fee. Further, in the previous draft of the model concession agreement, the quantum of increase of the concession period was fixed as 1.5% for every percentage shortfall from 20% threshold. The decrease of the concession period was fixed at 0.75% for every percentage of fee exceeding the 20% threshold; and
- 4. the amended provisions also expressly specify that if the actual fee is falling below or exceeding the threshold as mentioned above in point (2) above, it is the remaining concession period, as on the date of target point, which is increased or decreased, as the case may be. In the previous draft the increase or decrease was computed for the total concession period irrespective of the date of the target point.
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