In view of the sweeping reforms initiated by the National Highways Authority of India (NHAI), the country's road sector has seen a heightened activity as far as clearance to new projects and removing stumbling blocks are concerned. A research conducted by CRISIL Ratings says proportion of under-construction, high-risk highway projects has been reduced significantly from 53% two years back to 21% now, after a slew of steps were initiated by NHAI. These include significantly shorter timelines for right-of-way and approvals, loan support from the NHAI for long languishing projects, termination of stuck projects and their subsequent re-awarding, and affording a change in sponsor. As of now, only 2,000 km of the 9,400 km of highway projects under construction awarded by the NHAI on a build-operate-transfer (BOT) basis, are at high risk. In the operational BOT portfolio, too, approvals for change in sponsor and subsequent refinancing, along with traffic growth, have yielded results. About 80% of the operational portfolio, nearly 100 BOT projects are at low risk in terms of debt servicing, said Senior Director, CRISIL Ratings, Sachin Gupta, adding that the projects have debt service coverage ratios greater than 1, or strong sponsors that can manage cash flow mismatches. Apart from reduced risk, policy measures by the NHAI also resulted in a doubling of highway construction from 12 km per day in fiscal 2015 to 23 km in fiscal 2017. The pace is expected to quicken to 40 km per day in the near-term. The awarding of contracts, led by hybrid annuity model (HAM) and toll-operate-transfer (TOT) model is expected to sustain, given the announcement and subsequent implementation of the Bharatmala project, he insisted.
