National Highways Authority of India (NHAI) is likely to face a fund crunch, as the Planning Commission has disapproved a long-term borrowing plan of the body. As per the plan submitted by NHAI in July, NHAI has to borrow Rs 64,000 crore in addition to the Rs 1.92 lakh crore approved earlier.
According to the earlier plan, the authority had quoted the total expenditure for highway development as Rs 8.12 lakh crore, but this has now been revised to Rs 9.71 lakh crore, keeping inflation and higher input costs in mind.
The Planning Commission has rejected the plan at a time when the finance ministry has scuttled the road ministry?s proposal to take a $2-billion loan from the World Bank. The loan was sought for viability gap funding of road projects. However, the finance ministry is against the World Bank demand for changes in NHAI?s annuity model for national highways.
NHAI?s new plan was referred to the Committee on National Highways Development Programme, headed by Planning Commission member BK Chaturvedi?the same panel that had approved the loan of Rs 1.92 lakh crore under the earlier plan.
?I understand that the funding plan was considered by the Chaturvedi Committee, but the proposal has been rejected by Planning Commission,? a senior government official told FE
Since January this year, the road ministry and the Planning Commission have been involved in a bitter battle, with one blaming the other for the slow progress of road development. While road minister Kamal Nath went to the extent of calling Planning Commission ?an armchair advisor?, a paper by Planning Commission deputy chairman Montek Singh Ahluwalia?s infrastructure advisor Gajendra Haldea said NHAI may soon run bankrupt as its debts will exceed its earnings in the next three years.
As per sources, the Plan panel has rejected the financing road map, as it is against the proposed increase in per-kilometre cost of road development. But NHAI says the cost has been hiked due to high input costs. In the financing plan, NHAI had proposed that the per-kilometre cost for a four-lane highway should be raised from Rs 9.5 crore to nearly Rs 12 crore. For six-lane highways, the cost was to be raised from Rs 10 crore to Rs 13 crore a km.
The issue was taken up with Ahluwalia at an eGom meeting on October 19. Nath and finance minister Pranab Mukherjee are the other members of the group. ?Now, Ahluwalia has committed to have a fresh look at the plan and take a decision within a month. After the Planning Commission takes the decision, the plan will come before the EGoM for approval,? another government official said.
Chaturvedi and Haldea were unavailable for comments. When contacted, road secretary RS Gujral told FE, ?We need money for road development. This money can be sourced through either borrowing from the market or the World Bank or any other route.?
