Nitin Gadkari pitches for setting up of a dedicated funding agency for highways

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August 12, 2021 2:30 AM

“Here, we need one institution where NHAI stakes are there and financial institutions stakes are there. A joint venture. We can formulate the policy and we can go for that,” Gadkari said responding to investors’ request for ensuring low-cost fund for funding infrastructure projects.

The minister, however, reiterated that NHAI did not have any financial problem, thanks to monetisation of stretches and increasing toll collection which might go up to Rs 1.4 lakh crore annually in the next 3-4 years.The minister, however, reiterated that NHAI did not have any financial problem, thanks to monetisation of stretches and increasing toll collection which might go up to Rs 1.4 lakh crore annually in the next 3-4 years.

Minister for road transport and highways Nitin Gadkari on Wednesday pitched for the setting up of a dedicated funding agency for the highways sector along the lines of the Power Finance Corporation (PFC) or the Indian Railway Finance Corporation (IRFC).

Speaking at a virtual event organised by Confederation of Indian Industry (CII), the minister also said he would discuss with the Reserve Bank governor on the development of a scheme for using country’s forex reserve for infrastructure development.

Gadkari said the PFC-like financial institution can be set up in a joint venture mode in which National Highways Authority of India (NHAI) can have some stake while financial institutions can have the remaining. Such an institution will create more wealth for the country, generate potential for employment and change country’s infrastructure landscape of the country.

“The Railways has got IRFC; power ministry has got PFC; but in NHAI, we don’t have any financial arm,” he said.

The need for such an institution arises as “cooperation from the banks is not so easily available” for highway projects proposed to be built under build-operate-transfer (BOT), public-private partnership (PPP) and hybrid annuity model (HAM). Developers’ previous track record is also to be blamed for banks’ apathy, he said.

“Here, we need one institution where NHAI stakes are there and financial institutions stakes are there. A joint venture. We can formulate the policy and we can go for that,” Gadkari said responding to investors’ request for ensuring low-cost fund for funding infrastructure projects.

MoRTH was earlier in talks with multilateral agencies like the World Bank and the Asian Development Bank aimed at ensuring low-cost funding for the infrastructure space, but the response was not up to the satisfactory level.

“We need some low-cost capital/finance. We need to plan for that, but the problem is that, as far as my ministry’s limitation is concerned, we can’t do anything without the permission of the finance ministry. We can’t formulate any organisation; we can’t take help and make co-ordination with any financial institution. If we are to go for any investment, we need approval from the finance ministry. So, there are some constraints,” Gadkari said.

The minister, however, reiterated that NHAI did not have any financial problem, thanks to monetisation of stretches and increasing toll collection which might go up to Rs 1.4 lakh crore annually in the next 3-4 years.

He said using surplus forex reserves of the country, which touched a record high of $620.57 billion for the week ended July 30, can be used for low-cost infrastructure funding.

“Now, I have decided to talk to the RBI governor on how a scheme can be formulated by which we can use this forex reserve for the development of infrastructure in the country with low cost,” he said.

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