‘Monetisation of NHAI asset pool can meet 15% of funding needs over 5 fiscals’

Our Bureau Hyderabad | Updated on September 21, 2021

The success of the National Monetisation Pipeline (NMP) unveiled by the Centre recently hinges on road assets, says Crisil report

The monetisation of National Highways Authority of India (NHAI) asset pool can help generate about 15 per cent of the potential funding required by it for the next five fiscals, according to a report by Crisil.

The success of the National Monetisation Pipeline (NMP) unveiled by the Centre recently hinges on road assets.

As per the report of the Task Force for the National Infrastructure Pipeline (NIP), 15-17 per cent of the ₹111-lakh crore investment outlay envisaged under it is to be met through innovative and alternative initiatives such as asset monetisation and funding through a development finance institution (DFI).

Monetisation of road assets accounts for 27 per cent of the NMP in value terms. The government aims to generate ₹1.6 lakh crore by monetising 26,700 km of four-lane-and-more national highways via the toll-operate-transfer (TOT) and the infrastructure investment trust (InvIT) routes at ₹6 crore per km.

InvIT planned

The NHAI had bid out three TOT bundles netting ₹14,700 crore and giving investors 7 per cent yield and two received tepid response and were cancelled. Three more are under bidding and kept small to attract domestic capital.

The NHAI is also looking to raise ₹5,000 crore this year via a privately-placed InvIT.

The NHAI has greatly accelerated its pace of national highway construction, from only 2,623 km in fiscal 2017 to 4,175 km in fiscal 2021. However, more projects being executed on the engineering, procurement and construction (EPC) and hybrid annuity model (HAM) modes has meant a greater burden on public funds, with the NHAI’s balance sheet seeing its debt-to-equity ratio tripling to 1.5 times as of fiscal 2021.

Given the ambitious targets under Bharatmala and the construction of high-value expressways, along with higher repayment of borrowings, the NHAI’s fund requirements are expected to double to ₹10-lakh crore over the next 5.

If these funding requirements are met, Crisil estimates that the NHAI could construct 25,000 km of national highways over fiscal 2022-2026, compared with 17,228 km over fiscal 2017-2021.

Published on September 20, 2021

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