Even though the pace of highway construction almost trebled to 35 km/day in the last five years, pure-play public-private partnerships (PPPs) are showing no signs of picking up.
Even though the pace of highway construction almost trebled to 35 km/day in the last five years, pure-play public-private partnerships (PPPs) are showing no signs of picking up. While there seems to be a growing burden on the government finances from the EPC and hybrid annuity models, minister for highways and transport Nitin Gadkari tells FE’s Surya Sarathi Ray that financing of the highway projects won’t be a problem in the medium term.
Tell us about your main achievements as the minister for road transport and highways over the last about five years.
When I became the minister, 403 projects worth Rs 3.85 lakh crore were struck. We formed a new policy and resolved 95% of problems. We also terminated around 45 projects that were found to be non-viable. We have succeeded in maintaining transparency and honesty in the whole process of project selection, financing and execution. In last five years, we have awarded projects worth `11 lakh crore for highways, `5 lakh crore for ports and Rs 1 one lakh crore for water resources. The credit goes to all officers who worked with me. It was great team work.
Your target to build highways at the rate of 45 km/day for the current fiscal has proved too optimistic.
By March-end, we will reach 34-35 km/day. The target has to be kept at an elevated level.
Pure-play public-private-partnership projects haven’t yet taken off.
We have awarded projects worth Rs 2 lakh crore through the hybrid annuity model (HAM), in which the government gives 40% grant-in and developers bring in the remaining 60% almost evenly through equity and debt. In the Namami Gange project, we have awarded 14 projects under HAM. HAM is a PPP model.
Again, through the toll-operate-transfer (ToT) model, we are giving completed projects on long-term contract. In the first lot, against our expectation of Rs 5,600 crore, we have got Rs 9,800 crore. This was taken by a foreign party. In a way, this is also private investment. We can monetise more TOT project to rake in Rs 1.5 lakh crore. We can raise Rs 70,000 crore by issuing bonds. We don’t have any dearth of
funds now. We received relatively lukewarm response on pure-play PPP, so we brought in HAM. If we have awarded projects worth Rs 11 lakh crore, against our five-year cumulative budget of Rs 4 lakh crore, the remaining funds have obviously come from private investors.
Your second ToT bundle did not get buyers.
There were some problems with respect to the package. We will rebid these assets before March-end.
A large number of HAM projects are waiting for financial closure…
Banks have to finance (these projects). As highway projects are getting more viable, it will be good for banks to finance HAM projects.
Is the NHAI coming up with an IPO?
The NHAI has raised funds through masala bonds. It does not need any additional funds now. It will raise funds as per requirements. The NHAI is an ‘AAA’-rated corporation.
What is the thing that you could have done better in the last five years?
We wanted to make waterways on the Yamuna. But, because of opposition from environmentalists and the green tribunal, it did not happen. We had even prepared a DPR of Rs 12,000 crore. We are building a highway connecting between Delhi and Mumbai with an investment of Rs 1 lakh crore. Land acquisition has been completed. Nearly 60% work has been completed. We want to complete the work in two-and-a-half years.