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KIIFB disburses Rs 390 cr to NHAI for land acquisition

NHAI estimates a funding requirement of Rs 48,000 crore to convert 500 km of two-lane highways into four-lanes

NHAI, Kerala Infrastructure Investment Fund Board, Two-lane highways, Four-lane highways, KIIFB

The Kerala Infrastructure Investment Fund Board (KIIFB), the infrastructure funding arm of the Kerala government, has disbursed Rs 390 crore to NHAI.

This is the first instalment of a Rs 5,200 crore grant to NHAI to part finance the four/six-laning of some 565 km of national highways in the state. This model is likely to be used by NHAI with other state governments to part-fund the highway development programme.

NHAI estimates a funding requirement of Rs 48,000 crore to convert 500 km of two-lane highways into four-lanes, close to half of which will be used to acquire land. NHAI needs around Rs 22,000 crore to acquire 1,176 ha of additional land to build four/six lane highways. Acquiring one ha of land, including structures built on it, currently costs as much as Rs 20 crore.

The state government has directed KIIFB to extend the money as grant to NHAI. The state government cannot support KIIFB directly but advised the agency to borrow Rs 50,000 crore from the market over the next five years against future cash flows.

The state government, in turn, will give a portion of the motor vehicles tax collections over the next 30 years to help KIIFB repay the loans. KIIFB is giving the money to NHAI as a grant, assuming an increase in land value due to highway development will benefit the state’s tax collections, while higher motor vehicles tax proceeds due to an increase in road traffic will indirectly help the agency.

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June 2020
10 Jun 2020