The National Highways Authority of India (NHAI) is planning to float four special purpose vehicles for as many under-construction expressways, and raise a combined debt of Rs 60,000 crore to finance these projects.
As the NHAI has been temporarily barred by the government from accessing the debt market, the new loans will sit on the books of the SPVs and will be serviced through toll collections. The agency’s debt had gone up to Rs 3.48 trillion by the end of 2021-22, before it stopped raising more loans.
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The four identified expressways for project-based financing are 1,267-km Amritsar-Jamnagar, Delhi-Amritsar-Katra 670 km, Visakhapatnam-Raipur 464 km, Chennai-Bangalore 260 km.
“The cost of constructing these highways is Rs 90,000 crore of which NHAI will put in Rs 30,000 crore as equity and the rest will come from debt. Of the total Rs 60,000 crore debt, Rs 30,000 will come from banks as term loans and Rs 30,000 crore through bonds,” a senior official, who did not wish to be identified, said.
The proposal for the four new SPVs has to be approved by the Cabinet Committee on Economic Affairs. It has already been approved by the Public Investment Board.
The entire debt would be raised by the SPV in tranches as the construction work progresses and this may be over the next three years, the official said.
The four SPVs will be designed on the lines of DME Developers, which is implementing the 1,357-km Delhi-Mumbai Expressway.
The cost of construction of the expressway is Rs 53000 crore and NHAI’s equity contribution is Rs 5,000 crore while the rest is coming through debt.
The debt in this case is equally divided between Rs 24,000 crore term loans from banks and Rs 24,000 crore through bonds. The SPV has already availed Rs 19,000 crore through banks and raised Rs 11,000 crore through bonds.
In this financial year, DME Developers is expected to raise Rs 15,000 crore through debt. The repayment of debt of SPVs start a year after toll collection begins.
“The response by banks and financial institutions to the fundraising by DME SPV has been good. Every year NHAI used to raise Rs 65,000 crore through bonds and now that has stopped. The funds that used to be invested in NHAI bonds are available with banks for similar offerings by SPVs,” the official added.
For debts raised by SPV, the NHAI provides a letter of comfort to lenders.
NHAI counts fundraising by SPVs through debt as part of its asset monetisation receipts. If the four new SPVs become operational this year, it will aid achievement of monetisation targets.