Monetisation: Rs 30,000 cr to be mobilised from highway assets in FY22

By: |
August 25, 2021 8:48 AM

Of these, 5,000 km of highways are expected to be monetised in FY22 to mobilise about Rs 30,000 crore. The National Highways Authority of India’s (NHAI) first tranche of InvIT in FY22 is expected to consist of 586 km of assets in Rajasthan, Gujarat, West Bengal, and Bihar to raise about Rs 5,000 crore.

NHAI is also exploring a second tranche of a follow-on issue of the InvIT. The InvIT issue is envisaged to be privately placed.NHAI is also exploring a second tranche of a follow-on issue of the InvIT. The InvIT issue is envisaged to be privately placed.

Monetisation of operational highway stretches, which has the largest share of Rs 1.6 lakh crore, or 27%, in the national monetisation pipeline (NMP), includes offering 26,700 km of highways of four lanes and above to investors in four years through FY25.

Of these, 5,000 km of highways are expected to be monetised in FY22 to mobilise about Rs 30,000 crore. The National Highways Authority of India’s (NHAI) first tranche of InvIT in FY22 is expected to consist of 586 km of assets in Rajasthan, Gujarat, West Bengal, and Bihar to raise about Rs 5,000 crore. NHAI is also exploring a second tranche of a follow-on issue of the InvIT. The InvIT issue is envisaged to be privately placed.

Since 2017, NHAI has been successfully monetising its brownfield road assets through toll-operate-transfer (TOT)-based PPP concessions. The TOT model has since matured and is now an established model with a model concession framework already in place. Another method of monetisation that has seen traction in the recent past is the InvIT model. A number of road assets have been monetised through InvITs by private sector players.

Based on past trend in pace of award and construction, it is estimated that NHAI is incrementally adding minimum of 2,000-3,000 km of monetisable toll roads to its asset base every year. The proceeds from monetisation will be invested in new road projects, reducing the burden on the exchequer. The Centre is providing budget support of about Rs 57,000 crore to NHAI for road projects in FY22.

The total length of highway assets considered for monetisation (26,700 km) constitutes around 22% of the total national highways (estimated to be about 1,21,155 km), excluding the network operated by private sector under BOT-based PPP concessions.

The operational national highways constructed under EPC and HAM modes, especially in the four-lane and above category, have been considered for monetisation. This includes both the existing toll roads and potential toll roads to be added over the NMP period.

The total indicative monetisation value of assets considered for monetisation is estimated at Rs 1.6 lakh crore from FY22-25. It includes 29 stretches of 1,361 km in the north region, 22 stretches of 1,478 km in the east region, 25 stretches of 2,031 km in the west region and 28 stretches of 1,931 km in the south region.

The government on Monday unveiled the NMP, seeking to generate upfront revenue of Rs 6 lakh crore in the four years starting FY22, out of operational infrastructure projects, under long-term lease plans that involve minimal ceding of the government’s ownership of the assets.

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