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NHAI to raise over Rs 85k crore via asset recycling: Nitin Gadkari

“We are working on raising funds from banks and the market, monetising our assets more aggressively " Gadkari said.

, ET Bureau|
Sep 06, 2019, 06.31 AM IST
NHAI is working on setting up Infrastructure Investment Trusts to monetise its projects to mobilise additional resources through capital markets, Gadkari said.
NEW DELHI: The National Highways Authority of India (NHAI) will rely largely on asset monetisation to fund its road construction work and plans to raise more than Rs 85,000 crore through asset recycling, minister of road transport and highways, Nitin Gadkari, said.

“We are working on raising funds from banks and the market. At the same time, we are also working on restructuring ourselves, monetising our assets more aggressively and work out innovative means to run our operations,” Gadkari said.

The recent changes announced for the banking sector will improve its overall health, including the risk appetite, which will also have a positive effect on private investment in road sector, Gadkari said.

To revive private investment in the roads sector, his ministry is also identifying the shortcomings of the Build-Operate-Transfer (BOT) mode of construction.

“We are also considering assessing the viability of projects at a corridor level since individual stretches may not be financially viable but once the corridor is completed, induced and latent traffic would improve the viability of the entire corridor,” Gadkari said.

Gadkari said NHAI is also planning to raise long term finance from banks by securitising user fee receipts from fee plazas as an alternative mode of asset monetisation. The minister said that after the completion of Bharatmala Pariyojana, the need to construct national highways will come down, and then NHAI would be more focused on road asset management and include asset monetisation, contract management, operation & maintenance of existing highways with capacity augmentation wherever required.

The statement assumes significance in the backdrop of the Prime Minister’s Office questioning the excessive pace of road construction resulting in a cramped-up pipeline of projects in a letter to the highways ministry. The letter also pointed that road infrastructure had become financially unviable, while private investors and construction companies were withdrawing from green field road projects.

Gadkari said that funding for NHAI is not a concern as his ministry is exploring funding from multilateral agencies like Japan International Cooperative Agency (JICA) and the World Bank to invest in greenfield projects. “We are working on a proposal to monetise all completed projects through ToT / InviTs after two years of operation and all the BoT (Toll) projects immediately on completion of the existing concessions,” Gadkari added.

NHAI is working on setting up Infrastructure Investment Trusts to monetise its projects to mobilise additional resources through capital markets, Gadkari said. NHAI is looking to develop a system for capturing returns on appreciation in land value along developed NH projects.

“If NHAI could get a certain percentage of this value, it could be ploughed back for maintaining and upgrading road assets. Right now, the only returns to NHAI are through user fee or toll,” Gadkari said.

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