NHAI signs MoU with NIFF to source funds for highway projects

NHAI today signed a Memorandum of Understanding (MoU) with the National Investment and Infrastructure Fund (NIIF) to find alternative sources to fund highway projects.

While NHAI has been working on debt markets for long term financing, the highway major plans to tap into sovereign bonds and pension funds through this MoU.

It is also an attempt to attract international investors and fund houses who are willing to invest in road projects in India but not very keen to take risk related to the project execution.

Minister of Road Transport and Highways Nitin Gadkari said the process needs to be expedited and asked NIIF to come up with innovative sources of funding.

Speaking on Bharatmala Phase 1, he said the budgetary allocation of Rs 83,000 crore for 2019-20 can only be used for land acquisition and the estimated Rs 7.5 lakh crores need to be sourced from the market.

The MoU is related to co-operation in the formation of SPVs to execute the fund arrangement for large size road projects particularly greenfield projects to be executed by NHAI with a focus towards the second phase of Bharatmala.

NIIF is a fund promoted by the government to boost the infrastructure sector in the country. "The aim of this MoU is to get the funds for projects during the construction of highways rather than post-construction", said Sujoy Ghose, CEO, NIIF.

While both parties refused to divulge details of projects selected for investment by NIIF, Gadkari indicated the NIIF is ready with funds and will start investing in NHAI projects as requirements arise.

Funds through this mode may bring in investment at an economical rate for highway projects and reduce the stress of borrowing on NHAI balance sheet.