MoRTH Revises Model Concession Agreement for BOT (Toll) Projects

The Ministry of Road Transport and Highways (MoRTH), vide Office Memorandum dated August 10, 2026 (the “Circular”), has issued a revised Model Concession Agreement (MCA) for Build-Operate-Transfer (BOT) (Toll) Projects following deliberations and recommendations of an Inter-Ministerial Committee comprising MoRTH, NITI Aayog, the Department of Economic Affairs, the Department of Financial Services and the Department of Legal Affairs. The revised MCA seeks to address key challenges faced by stakeholders and make BOT (Toll) projects more attractive and financially viable for private sector participation.

A key feature of the revised MCA is the introduction of a structured mechanism for sharing traffic risk between the Authority and the Concessionaire under Article 29 (Effect of Variations in Traffic Growth). In particular:

1. During the first 7 target dates, where the actual weighted average daily traffic falls short of target traffic by more than 10%, the concessionaire becomes eligible for revenue support from the authority, with the support increasing with the extent of the traffic shortfall;
2. After the 7th target date, where traffic falls short of target traffic by more than 10%, the remaining Concession Period may be extended by 1% for every 1% traffic shortfall, subject to a maximum extension of 10% of the Concession Period; and
3. The subsequent target traffic is correspondingly reduced to account for the revised traffic levels.

The revised MCA introduces a buy-back mechanism under Clauses 29.2.3 and 37.2A, whereby the Authority is required to buy back the project if the weighted average daily traffic exceeds the prescribed design capacity in any two accounting years within a block of three consecutive accounting years. The mechanism provides greater certainty to the Concessionaire regarding exit upon sustained achievement of the Project’s Design Capacity, which is determined based on the characteristics of the Project Highway and the corresponding thresholds prescribed under the MCA for different categories of highways.

The revised MCA further introduces mechanisms intended to improve financial flexibility and project bankability. These include:

1. provision for revenue support based on actual traffic performance during the initial years of operation; and
2. corresponding adjustments to the debt repayment schedule where the Concession Period is modified due to traffic variations, as contemplated.

The revised MCA also retains and strengthens provisions facilitating toll collection and revenue realisation, with the Concessionaire continuing to have the exclusive right to collect and appropriate User Fee during the Concession Period. The MCA further provides for compensation from the Authority in respect of eligible non-commercial vehicles using valid Fastag passes, equivalent to product of number of non-commercial vehicles crossing the toll plazas with such valid pass and 90% of the applicable single-journey fee, subject to the prescribed limit on the number of crossings considered for such compensation.

The revised MCA seeks to rebalance traffic and lifecycle risks between the Authority and private developers while enhancing the financial viability and predictability of BOT (Toll) projects. The revised framework is expected to strengthen project bankability and private-sector participation in national highway development.