After receiving lukewarm financial support for the Bharatmala programme in Budget 2018-19, National Highways Authority of India (NHAI) has decided to raise its bond target for the financial year to keep the project going.
A senior official from the Authority told Moneycontrol that the organisation was looking at increasing its bond target and discussions have started regarding the issue.
“…The borrowing plan for this year is being finalised… Potential borrowing is the same but it may go up given the size of the work which we have taken up,” the official said.
Moneycontrol had first reported in January that NHAI has set a target of Rs 62,000 crore to be raised through bonds. It raised about Rs 52,000 crore during 2017-18.
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The apex authority to construct national highways issues bonds, including masala bonds (on international stock exchanges), under section 54EC of Income Tax Act.
Centre had launched its flagship programme, Bharatmala, in October last year after it received the cabinet committee’s approval. The programme envisages to develop close to 60,000 kilometers of new national highways with a capital outlay of Rs 6.92 lakh crore.
The first phase is already underway which will see construction of 34,800 km of national highways at Rs 5.35 lakh crore. Union minister for road transport and highways, Nitin Gadkari, has said that the ministry plans to award 50 percent of the projects under phase I by December this year.
The official said that the Authority is yet decide the quantum of additional funds as detailed project report (DPRs) for all the highway projects to be taken up this year are still underway.
“I won’t be able to put a figure to that (size of additional funds) as details are being worked out. DPRs are being finalised right now… As soon as they are prepared and we know the cost of projects, including the cost of land as these are all dynamic figures… we will know the revised target,” he said.
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The Authority has set itself a target of August to finalise the new bond target for the financial year.
Two other officials confirmed the development but couldn't specify either the timeline for it or the quantum of addition.
The move comes at a time when NHAI has been unable to tap varied sources of funds to finance the project. While its plan to bring Investment infrastructure trust (InvITs) has slowed down due to concerns raised by Finance Ministry, the idea to bring special “Bharatmala bonds” offering different coupon rates to different people (like, higher rate of return to senior citizen) was also disapproved by the ministry.
The union budget for 2018-19 apportioned Rs 71,000 crore as budgetary support and Rs 91,663.13 crore as public sector investment to NHAI.
As per the cabinet note for Bharatmala, the programme will receive, under phase I, Rs 2,37,024 crore through central road fund, Rs 59,973 crore as gross budgetary support, Rs 34,000 crore through proceeds from toll-operate-transfer (TOT) and Rs 46,048 crore toll permanent bridge fee over the next five years.
Currently, NHAI is laying its hands on proceeds from TOT to fund the programme. It successfully bid first package of highways in March this year for Rs 9,681.5 crore. The package having nine stretches, adding up to 648 km of highways and spread across Gujarat and Andhra Pradesh was won by joint venture between Ashoka Buildcon and Sydney based Macquarie group.
The Authority is set to bring its next package of seven highway stretches which adds up to 566 km.
TOT is a mechanism adopted by NHAI where the authority puts its operational assets (highway stretches) on auction. The bidder, who submits the highest bid, has to deposit the money (bid amount) upfront with NHAI. The authority thus invests this amount for construction of new highways. Against the money, the bidder acquires the right to operate and maintain the selected highways via toll collections.