NHAI in talks with SBI to securitise part of toll receipts for raising funds

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Published: February 10, 2020 1:54:53 PM

In 2019-20, NHAI is expected to collect around Rs10,600 crore toll from its operational highway stretches.

NHAI, SBI, Investment Trust, NHDP stretches, Bharatmala Pariyojana, NHDP, national highwaysThe Cabinet had, in November, given the authority its nod to raise funds through the process.

The National Highways Authority of India (NHAI) is in talks with the State Bank of India to securitise a part of its toll receipts for raising funds. The Cabinet had, in November, given the authority its nod to raise funds through the process.

Proceeds from asset monetisation of this kind will help the authority mobilise funds for development and maintenance of highways. Sources said the NHAI held a couple of meetings with senior bank officials. The bank will hold a meeting internally, and is expected to revert to the highways authority soon. NHAI currently monetises public-funded highway stretches through toll-operate-transfer mode. It has plans to launch the Infrastructure Investment Trust (InvIT) route by April next fiscal year.

In 2019-20, NHAI is expected to collect around Rs10,600 crore toll from its operational highway stretches. The amount, as per the Union Budget document, may go up to Rs11,500 crore in 2020-21. The securitisation of toll receipts will help the NHAI raise funds from stretches where the traffic is already high and needs capacity augmentation in the next few years. Infrastructure assets such as roads are best suited for securitisation as they ensure stable cash flow, backed by long-tenure concession agreements and higher recovery rates.

In the Union Budget 2020-21, the NHAI has been given permission to monetise a dozen of highway bundles, a set of stretches combined into one, with a length of 6,000 km for monetisation. Experts say such monetisation exercise, including the one through securitisation of toll receipts, could fetch around Rs60,000 crore to NHAI for use in development and maintenance of highways.

The NHAI had been mandated to develop 34,800 km (including 10,000 km residual NHDP stretches) highway under the first phase of the Bharatmala Pariyojana in October 2017 with an estimated outlay of Rs5.35 lakh crore. A total of 255 road projects, with an aggregate length of about 10,699 km, have been approved till October 2019 with a total cost of Rs2.65 lakh crore. The government had earlier targeted to complete the first phase of Bharatmala Pariyojana by 2021-22. For the current financial year, NHAI has been given 4,500 km construction and 6,500 km awards target.

However, in the Budget for 2020-21, NHAI has been given budgetary support of Rs42,500 crore, down from Rs36,391 crore revised estimate for 2019-20; and permission to raise Rs65,000 crore, down from Rs75,000 crore in 2019-20, from the market. Asset monetisation, which has been pegged at Rs10,250 crore for 2020-21, is critical for NHAI to meet its present and future construction. NHAI needs additional funds as it is increasingly awarding projects though the Engineering, Procurement and Construction (EPC) route, where it is to bear all the expenses. NHAI is also in dire need of funds to finance its burgeoning debt, which reached Rs1.8 lakh crore by the end of March last year.

Analysts estimate NHAI’s borrowings to go up to Rs3.31 lakh crore by FY23, if NHAI is to fund the construction of around 35,000 km highway projects, including the first phase of 24,800-km Bharatmala programme and the balance road works under the NHDP.

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