NHAI sets up panel for Infrastructure Investment Trust selections

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Published: July 3, 2020 1:01 PM

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 has a mandate to develop 34,800 km (including 10,000-km residual NHDP stretches) highway projects under the first phase of Bharatmala Pariyojana.

The National Highways Authority of India (NHAI) has set up a 4-member search-cum-selection panel, comprising HDFC chairman Deepak Parekh and former highway secretary Sanjay Mitra, to appoint a chairman and two independent directors, to manage its Infrastructure Investment Trust (InvIT).

The other members of the committee are ICICI Bank chairman Girish Chandra Chaturvedi and NHAI chairman Dr Sukhbir Singh Sandhu, who is also the convenor.  NHAI is in the process of setting up an InvIT. As a part of the process, a new company is being set up to act as the investment manager to the proposed InvIT. The Cabinet had in December authorised NHAI to launch InvITs to enable it to monetise national highways that have a toll collection track record of at least one year.

Sources said NHAI has already filed papers with the market regulator Sebi to launch its first InvIT. The authority had earlier said it would launch the first InvIT in the first quarter of 2020-21 with the aim of raising `5,000-6,000 crore.

“As NHAI InvIT shall be the first InvIT to be sponsored by any government or semi government entity in the country, it is important to have a professional management structure for the investment manager,” NHAI said in a statement on Thursday.

The panel has been set up to select the best talent from the market for appointment in the key positions of the new company. The idea is to set up a competent entity of experts that can professionally run the infrastructure trust to mobilise resources from the market for monetising completed highway projects of NHAI.

NHAI has a mandate to develop 34,800 km (including 10,000-km residual NHDP stretches) highway projects under the first phase of Bharatmala Pariyojana, with an estimated outlay of Rs 5.35 lakh crore. An aggregate length of about 12,000 km has been awarded so far.

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. It is in dire need of funds to finance its burgeoning debt, which reached Rs 2.28 lakh crore by the end of February 2020. Analysts estimate NHAI’s borrowings to go up to Rs 3.31 lakh crore by FY23.

In the Budget for 2020-21, NHAI was authorised to monetise “at least 12 lots of highway bundles of 6,000 km within 2024”. Apart from the InvIT, NHAI may use the toll-operate-transfer (TOT) and toll securitisation routes to monetise public-funded highway assets. Experts say monetisation of these assets could have helped NHAI to raise up to Rs 60,000 crore, at an annual average of Rs 15,000 crore.

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