The board of National Highways Authority of India (NHAI) has cleared a plan to monetize its land parcels along highways to part-fund the huge land acquisition costs for building roads, a top official at the highway development agency has said.

“The NHAI board has recently approved a land monetisation policy wherein, for highway projects near to urban areas, there will be highway influence zone which would be identified - 500 metres on either side - and transactions which will be recorded in that particular influence zone, a part of that will go into an escrow account which will be used to fund the land cost,” Ashish Sharma, Member (Finance) NHAI told investors during a road show on Monday.

“That is an arrangement we are trying to work out with the States to optimize the land expenditure which we are incurring. We are going to apply the policy this year in some of the projects where value capture will become a key component of our financing policy,” Sharma said.

“Monetisation of land has become necessary because land was becoming a major component of our total expenditure”, Sharma said. “In fact, for the initial two years of starting the Bharatmala program, the expenditure on land was more than the expenditure on civil construction,” he said.

“Land was a major drain. Whenever a highway is constructed, the real beneficiary is the particular State and NHAI as such is realizing only on tolling so that is not the best way forward,” he added.

Road Transport and Highways Minister, Nitin Gadkari said that the NHAI has zeroed in on “new solutions” to increase revenue.

“In all new express highways, we have provisions for making road-side amenities, But, our policy was wrong because we decided to make it on 60 acres. Now, we have reduced it to small parcels of 10-12 acres, out of which One acre of land is reserved for petrol pumps. We are going for tendering wherein the land belongs to NHAI and petrol pumps belongs to someone else. In 2-3 years, we will start at least 700-800 petrol pumps, so that income from diesel or petrol, LNG and other things will again add to the income of the roads,” Gadkari said during the road show in Mumbai.