The National Highways Authority of India (NHAI) special purpose vehicle for financing Delhi-Mumbai Expressway has raised Rs 775 crore through its maiden Green Bond issue.
Conducted under a close bidding system, the total issue size was Rs 775 crore, comprising a base issue of Rs 500 crore and a green-shoe option to retain oversubscription up to Rs 275 crore. The bond offers a yield of 7.23%, according to an official statement.
The funds raised by Delhi-Mumbai Expressway Development will be allocated to environmentally sustainable initiatives. These include constructing animal underpasses and overpasses in forested areas, financing tree cover along the expressway, installing solar-powered streetlights, creating natural stormwater drainage systems, recycling construction waste and fly ash, and implementing rainwater harvesting and pond excavation projects.
“This first-of-its-kind initiative for the roads and highways sector will set a benchmark and encourage participation from a diverse set of investors,” said NHAI chairman Santosh Yadav.
Incorporated in August 2020, DME Development aims to raise approximately Rs 48,000 crore from banks and financial markets through loans and bonds to support the construction and operation of the Delhi-Mumbai Expressway. To date, Rs 43,000 crore has been secured for the ambitious 1,380-km project, which is estimated to cost over Rs 1 trillion.
The project is being executed in 52 packages, with 31 operating under the Engineering, Procurement, and Construction (EPC) model, and the remaining 21 under the Hybrid Annuity Model (HAM). The HAM approach combines elements of the EPC and Build-Operate-Transfer (BOT) models, where the government provides 40% of the project cost in milestone-linked tranches, and contractors arrange the remaining 60%.
As global efforts to reduce carbon emissions intensify, the demand for green bonds continues to rise. Dedicated global funds are actively investing in such bonds, with the annual issuance of green, social, sustainability, and sustainability-linked bonds expected to surpass $1 trillion in 2024, according to industry estimates.