NHAI defers plan to monetise operational publicly-funded highway projects
Fund mobilisation through the asset monetisation programme is crucial for NHAI
The National Highways Authority of India (NHAI) has put its plan to monetise operational publicly-funded highway projects on hold for two months. The decision has been taken because it is likely that investors might not commit long-term investments at this juncture, due to uncertainty over toll collections.
This implies that the authority, which is facing funding constraints amid a prolonged sluggishness in private investments, might have to struggle to stick to the announced pace of highway awards and construction.
NHAI has three instruments to raise fund through monetisation of its assets of which two – Infrastructure Investment Trust (InvIT) and toll secrutisation -- are untested so far. The other one, toll operate transfer (TOT) model, has been successfully exercised twice, but one attempt had to be aborted.
In the Budget for 2020-21, NHAI was authorised to monetise at least 12 lots of highway bundles of 6,000 km within 2024, a process which would have helped the authority to raise up to Rs 60,000 crore, at an annual average of Rs 15,000 crore.
The TOT Bundle-4, for which the authority has set the minimum bid price at Rs 2,166 crore, has already seen multiple extensions of deadlines to its present to 15 May 2020. It will also be deferred by two months.
Fund mobilisation through the asset monetisation programme is crucial for NHAI as it is increasingly awarding projects through the engineering, procurement and construction (EPC) route, where it is to bear all the expenses.
On the other hand, NHAI has a mandate to develop 34,800 km (including 10,000 km residual National Highways Development Project stretches) highway projects under Phase-I of Bharatmala Pariyojana, with an estimated outlay of Rs 5.35 lakh crore.
A total of 255 road projects with an aggregate length of about 10,699 km have been approved till October 2019 under the phase with estimated total cost of Rs 2.65 lakh crore. The authority hopes to award a minimum of 4,000 km and develop 4,500 km highway length in FY21 compared with 3,979 km construction and 3,200 km awards in 2019-20.