NHAI eyes raising Rs 60,000 crore by securitising four highways

The National Highways Authority of India (NHAI) is aiming to raise Rs 60,000 crore by securitisation of four under construction road projects. According to senior NHAI officials aware of the plan, the Vishakhapatnam-Raipur, Delhi-Amritsar-Katra, Amritsar-Jamnagar, and Chennai-Bengaluru highways will be monetised through this route.

This proposal is presently awaiting a nod of the Cabinet Committee on Economic Affairs (CCEA), following which the targeted amount will be raised within 3-5 years, over the development of these projects.

“A plan to form four self-sustaining special purpose vehicles (SPVs) has been firmed up. Each of these road assets will be transferred to the SPV and will help in freeing up NHAI’s deployed capital,” a top NHAI official told ET.

This approach is different from privatisation where the ownership of assets is transferred in lieu of a one-time payment. Under securitisation, NHAI gets an upfront pay out but reimburses the raised amount in tranches from the toll income of the asset. There is no payment to lenders before toll income is generated from a project. This model is preferred for road assets that have a high traffic potential as financial institutions assess lesser risk in them. Transferring an asset to the SPV also lowers NHAI debt as the burden is shifted to the new entity and does not remain on the books of the highway builder.

The total capital requirement for these four highway projects is estimated at Rs 90,000 crore.

“Of the total fund requirement, Rs 30,000 crore will be infused by NHAI as equity. Another 30,000 crore will be in the form of term loans, and the remaining will be raised from capital markets through institutional investors,” the official said.This plan is banking on the success of a similar model adopted for the Delhi-Mumbai Expressway. The total estimated cost of this Greenfield project was about Rs 87,500 crore, including land acquisition worth Rs 20,600 crore.Expenditure, other than land acquisition during construction, is estimated at about Rs 53,849 crore. This was funded through Rs 48,464 crore debt and NHAI equity of about Rs 5,385 crore. “Till now, around Rs 32,000 crore has been raised using a mix of bonds and bank loans from the Delhi-Mumbai expressway,” the official said.

The National Monetisation Pipeline (NMP) estimates aggregate monetisation potential of Rs 6 lakh crores through core assets of the Central government, over a four-year period, from financial year 2022 to 2025. Road assets worth Rs 1.52 lakh crore are under the plan.