With a number of highway projects waiting to be passed and constructed, the National Highways Authority of India is planning to rope in various foreign pensions and several other equity investors to invest in their upcoming planned highway projects. A senior official from NHAI claimed that they are planning on doing this to reduce the burden of the overall expenditure. The projects that are levying on the equity partnership are expected to generate a whopping budget amounting to Rs. 46,000 crore.
The dire need of equity partners for funding primarily rose because of the over-subscription of the maiden bundle of the nine highway projects that were passed under the toll operate transfer (TOT) model which is expected to churn profits amounting to Rs. 10,500 crore. A representative of National Highways Authority of India exclaimed that they are seeking investors like that of National Investment and Infrastructure fund (NIIF). He further stated that the primary reason for equity is mainly because of the higher returns based on higher risks.
NHAI’s idea behind equity investment is to convert individual projects into profit churners. These equity partnerships are going to be project specific wherein the equity partners will think like that of a developer. There are several high-end projects in the talk, the Dwarka Expressway, Eastern Peripheral Expressway, Chennai-Bangalore and Bangalore-Mysore expressway that NHAI wants to fund via these equity funds. This will lessen the burden concerning the investments which will further allow them to borrow more from the market.
This move is expected to inflict significant impact in the budget for the highway projects as the Government has taken a number of initiatives to construct new expressways and elevated roads with an estimated expenditure of over Rs. 46,000 crores in order to ease the traffic congestion in some of the major cities in India.
Apart from these issues statements regarding the plans, the Union Minister of Road Transport and Highways, Mr Nitin Gadkari stated that the officials are working on the highway monetisation concerning various unidentified stretches which is expected to fetch over Rs. 1.5 lakh crore. The honourable minister exclaimed that the Government is working to rope in some other small investors apart from the domestic and international ones. Cumulatively, there are over 10 other projects in the talks that are set to be finalised under TOT for an even better response.