NHAI to keep up its sterling performance in road sector, Nitin Gadkari

National Highway Authority of India (NHAI)

In a strong rebuttal to the PMO’s questioning of the excessive pace of road construction resulting in a cramped-up pipeline of projects, minister of road transport and highways, Nitin Gadkari , said that (NHAI) will rely largely on asset recycling and monetization to fund its road construction work and plans to raise more than ₹85,000 crore via asset recycling. As a matter of fact, funding for NHAI is not a concern as his ministry is exploring funding from various sources including multilateral agencies like Japan International Cooperative Agency (JICA) and the World Bank and also through innovative methods to run its operations in the construction of green field projects. Moreover, the recent changes in the banking sector will improve its overall health, including the risk appetite, which will also have a positive effect on private investment in road sector. In addition, reviving private investment, his ministry is also identifying the shortcomings of the Build-Operate-Transfer (BOT) mode of construction and considering assessing the viability of projects at a corridor level since individual stretches may not be financially viable but once the corridor is completed, induced and latent traffic would improve the viability of the entire corridor.

After the completion of Bharatmala Pariyojana, the need to construct national highways will come down, and then NHAI would be more focused on road asset management and include asset monetization, contract management, operation & maintenance of existing highways with capacity augmentation wherever required. NHAI is also planning to raise long term finance from banks by securitizing user fee receipts from fee plazas as an alternative mode of asset monetization. If NHAI could get a certain percentage of this value, it could be ploughed back for maintaining and upgrading road assets as of now the only source of return to NHAI is through user fee or toll. The statement assumes significance in the backdrop of the PMO’s missive to MoRTH pointing out that road infrastructure had become financially unviable, as private investors and construction companies are increasingly withdrawing from green field road projects.