NHAI to delay InvIT launch till road traffic is restored to pre-COVID-19, second wave levels

Representative Image (Image: NHAI)

The National Highways Authority of India (NHAI) plans to delay the launch of its maiden Infrastructure Investment Trust (InvIT) till such time that traffic on the highways is back in full volume, its officials told Moneycontrol.

The NHAI had earlier planned to launch its InvIT by the end of May or by the beginning of June after getting Securities and Exchange Board of India (SEBI) approvals, but a fall in toll collection due to the outbreak of the second wave of COVID and lockdowns being imposed by different states across the country have caused the company to defer this decision.

"A sharp fall in toll collections in May coupled with predictions of a third wave of COVID-19 have led to uncertainty in the minds of investors looking at the (road) sector," a company official admitted.

According to rating agency Icra, toll collections fell by around 10 percent in April 2021 over March 2021 and are estimated to have declined by 25-30 percent in May 2021 over April 2021.

“Once traffic is restored, we will go ahead with our asset monetisation plans. We are in regular touch with our potential investors. Traffic on highways is expected to resume in full throttle from the middle of the current month,” the official said.

The NHAI has already received approvals from market regulator SEBI for the draft prospectus submitted by the National Highways Infra Investment Managers.

The National Highways Infra Investment Managers is the investment manager for the company's InvIT.

An InvIT is a quasi-debt instrument that provides investors with a steady yield derived from cash flows from operating infrastructure projects such as roads, transmission lines, or renewable energy projects.

Apart from InvIT, NHAI also plans to delay its other asset monetization plans, the company official said.

The NHAI can raise funds through two other models– the toll-operate-transfer (TOT) model and toll securitisation.

The central government in the Union Budget for 2021-22 (Apr-Mar) has set a target for the NHAI to raise Rs 10,000 crore through monetisation of its operational stretches in the current fiscal year.