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PIB Summary- 31th October, 2023 | Current Affairs & Hindu Analysis: Daily, Weekly & Monthly - UPSC PDF Download

Toll Operate Transfer (TOT) Model

Context
The National Highways Authority of India (NHAI) recently awarded two highway monetisation projects worth Rs 6,584 in the toll, operate, and transfer (TOT) mode.

Toll Operate Transfer (TOT) Model


Authorization and Purpose

  • CCEA Authorization: In 2016, the Cabinet Committee on Economic Affairs (CCEA) authorized the NHAI to monetize public-funded national highway projects through the TOT model.
  • Purpose: The TOT model aims to monetize operational public-funded projects by assigning fee collection rights to concessionaires against an upfront lump sum payment.

Encouraging Private Participation

  • Private Involvement: The TOT model is designed to promote private sector participation in the highway sector, enhancing infrastructure development and management.

Model Mechanics

  • Bidding Process: Operational projects, in service for two years, are offered for bidding.
  • Concession Period: Concessionaires (developers or investors) are granted a predetermined 30-year period for fee collection and appropriation.
  • Toll Revenue Basis: Assignment of rights is based on the toll revenue potential of selected national highway projects.
  • O&M Obligations: Concessionaires are responsible for project Operation & Maintenance (O&M) throughout the concession period.
  • Transparent Procurement: Concessionaires are selected through a transparent and uniform procurement process within an approved framework.

Utilization of Proceeds

  • Fund Utilization: The model generates a corpus, which the government can use to fund future highway development and O&M, even in less economically viable areas.
  • Meeting Infrastructure Needs: It supports the government in addressing highway infrastructure needs, including those in less lucrative regions.

Exercise KAZIND-2023

Context
Recently, the Indian Army and Indian Air Force contingent, comprising 120 personnel, departed to take part in the Joint Military ‘Exercise KAZIND-2023’ which will be conducted at Otar, Kazakhstan, from October 30th to November 11th, 2023.

Exercise KAZIND-2023

  • 7th Edition: This is the 7th iteration of the Kazind exercise.
  • Inception: The Joint Exercise between India and Kazakhstan began as ‘Exercise PRABAL DOSTYK’ in 2016.
  • Upgrade to Company-Level: After the second edition, it was elevated to a company-level exercise and renamed ‘Exercise KAZIND’.
  • Bi-Service Exercise: In this edition, the exercise has been further upgraded to a Bi-service Exercise, including the Air Force component.

Focus and Activities

  • Counter Terrorism Operations: The current edition focuses on practicing Counter Terrorism operations within a sub-conventional environment under a United Nations mandate.
  • Tactical Drills: Contingents will jointly rehearse various tactical drills, including Raid, Search and Destroy Operations, Small Team Insertion and Extraction operations, etc.
  • Counter Unmanned Aerial System Operations: The exercise scope also encompasses Counter Unmanned Aerial System Operations.

Significance

  • Mutual Insight: Provides both sides with the opportunity to gain insight into each other’s tactics, battle drills, and procedures, essential for operations under the United Nations.
  • Skill Development: Joint training develops the necessary skills, resilience, and coordination for conducting military operations in semi-urban and urban environments.
  • Skill Exchange: Allows both sides to practice a wide range of combat skills and learn from each other.
  • Knowledge Sharing: Provides a platform for the contingents to exchange views and share best practices.
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FAQs on PIB Summary- 31th October, 2023 - Current Affairs & Hindu Analysis: Daily, Weekly & Monthly - UPSC

1. What is the Toll Operate Transfer (TOT) Model?
Ans. The Toll Operate Transfer (TOT) Model is a form of public-private partnership (PPP) where a private company is awarded the rights to operate and maintain a toll road for a specific period of time. In return, the company collects toll revenue from road users during this period.
2. What is the significance of the TOT Model in the context of the KAZIND-2023PIB exercise?
Ans. The significance of the TOT Model in the KAZIND-2023PIB exercise is that it may be considered as a potential financing option for infrastructure development in Kazakhstan. The exercise aims to explore various PPP models, including TOT, to enhance infrastructure connectivity and promote economic growth.
3. How does the TOT Model work?
Ans. Under the TOT Model, a private company or consortium is granted a concession to operate and maintain a toll road. The company invests in the road's construction, operation, and maintenance, and recovers its investment through toll revenue collected from road users during the concession period. After the specified period, the ownership and operation of the road are transferred back to the government.
4. What are the advantages of the TOT Model?
Ans. The advantages of the TOT Model include: - Private sector efficiency: The private company brings its expertise and efficiency in managing and maintaining the toll road, leading to better service delivery. - Risk transfer: The private company bears the financial and operational risks associated with the toll road, reducing the burden on the government. - Revenue generation: The toll revenue collected by the private company can be used to finance future infrastructure projects or repay debt. - Improved infrastructure quality: The private company's investment and focus on maintenance can lead to better road conditions and enhanced user experience.
5. Are there any challenges associated with implementing the TOT Model?
Ans. Yes, there are some challenges associated with implementing the TOT Model, including: - Revenue uncertainty: The financial viability of the toll road depends on the projected traffic volume and toll rates. If these estimates are inaccurate, it may lead to lower-than-expected revenue. - Public acceptance: Toll roads may face resistance from the public, who may perceive them as an additional financial burden. - Regulatory framework: Establishing a robust regulatory framework is crucial to ensure transparency, accountability, and fair competition in the bidding process and operation of toll roads. - Contractual complexity: Drafting and managing the concession agreement between the government and the private company can be complex and time-consuming. - Political and legal risks: Changes in government policies or legal disputes can disrupt the smooth operation of the toll road and affect investor confidence.
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