NHAI is Wooing Investors to Reduce its Financial Woes

1. NHAI is Wooing Investors to Reduce its Financial Woes The business environment in India, at present, is creating a ground for investors to expand their investment basket. Many sectors are coming up with a plethora of sops for investors. The Highways sector, which in recent past has seen financial hiccups, is also pulling multinational companies and domestic companies to its fold with reforms happening in the sector. To realise the targets of the development of the highways, the National Highways Authority of India (NHAI) has been coming up with revolutionary models and processes, which could allay fears of investors, to finance its projects. The National Highways Authority of India (NHAI), which was established by the parliament of India through the national highways act 1988, has been entrusted with the development, management, and maintenance of the assigned portion of the national highway network. The NHAI, which is a statutory as well as an autonomous body, operates under the aegis of the Ministry of Road Transport and Highways (MoRTH), Government of India. Till date, the NHAI has been involved in many construction works pertaining to the national highways. In the year 1998, ten after its creation, the then government of India has assigned the NHAI with the National Highways Development Project (NHDP). The main aim of the project is to upgrade and widen the national highways of India to meet the growing demand and the global standards. This project got subsumed under the Bharatmala Pariyojana, which is started by the Government of India in 2015. The Government of India has set some ambitious targets to be achieved under the Bharatmala Pariyojana. Around 84,000 km of national highways would be developed with an estimated investment of 5.35 lakh crores. Given the quantum of work and financial requirements, the NHAI alone couldn’t achieve the target. So, it called upon investors and developers in this mega project. As mentioned earlier, having an investment-friendly climate isn’t enough, but there has to support from the responsible organisations. So, the NHAI has come up with different Investment models and also planning to rope in equity investors and institutional investors. Some of the recent models, which were introduced by the NHAI in the last financial year, are Hybrid Annuity Model (HAM), Toll-Operate-Transfer (TOT) have proven to be successful. The Hybrid Annuity Model (HAM), as the name suggests it is a hybrid of different models namely Build, Operate, Transfer (BOT) and Engineering, Procurement, and Construction (EPC). On the backdrop of fears on Returns on Investment (ROI), the Ministry of Road Transport and Highways along with the NHAI, has introduced this model to revive the stalled projects. Under this hybrid model, 40% of the total investment would be borne by the government and the developer shall bear the rest of the amount. The NHAI will pay the developer the remaining 60% in instalments after the completion of the project. Another successful model is Toll Operate Transfer, called as TOT. This model is the part of the NHAI’s Asset Recycling Plan. Under this model, the NHAI would call for bids to maintain and Toll particular stretches of national highways. In the last financial year alone, the NHAI has received unprecedented bids to everyone’s surprise. The received amount would be used for the development of new projects by the NHAI.

2. This financial year, the NHAI is planning to tap untapped sources of finances like Equity investors, Institutional investors, and Infrastructure development funds would boost the developmental works in the highways sector and help the Government of India to subdue its financial problems. #MinistryofRoadTransport #RoadProjectsinIndia