The National Highways Authority of India (NHAI) plans to transfer 12 highway stretches, totalling 850 km, to the National Highways Infrastructure Trust (NHIT) in the current fiscal year, aiming to raise up to INR 20,000 crore. This is part of a broader asset monetisation strategy targeting INR 54,000 crore through various modes. Last year, NHAI raised INR 16,000 crore via NHIT for 889 km of highways. The funds, crucial for reducing borrowings and continuing highway construction, will be raised through a mix of debt and unit capital. NHIT plans to issue bonds, potentially raising INR 2,000-3,000 crore.
The National Highways Authority of India (NHAI) has identified 12 operational highway stretches, with a combined length of 850 km, for transfer to the National Highways Infrastructure Trust (NHIT) in the current financial year. This asset monetisation drive is expected to fetch the NHAI up to INR 20,000 crore, according to official sources. In the fiscal year 2023-24, the NHAI mobilised INR 16,000 crore via the NHIT (InvIT) route by leasing out 889 km of highway stretches.
For the monetisation through toll-operate-transfer (ToT) and InvIT modes, the NHAI has earmarked 33 highway stretches with a total length of 2,741 km for the fiscal year 2024-25. The target for the year has been set at INR 54,000 crore through InvIT, ToT, and project-based financing.
In recent years, the NHAI has significantly reduced fresh borrowings to manage its heavy debt. The NHAI now relies primarily on budget outlays to maintain the pace of highway construction, with proceeds from monetisation being a major mode of fundraising. Half of the stretches offered to NHIT this fiscal year are in Andhra Pradesh, with two in Chhattisgarh, and one each in Uttar Pradesh, Rajasthan, Uttarakhand, and Gujarat, according to the sources.
The yield from monetisation varies for each stretch, depending on traffic volumes and toll collections. Last year, the entire process was completed in one go through "InvIT Round 3". This year, the process may be completed in two phases. Funds for the acquisition will be raised by NHIT through a mix of debt and unit capital from existing stakeholders. NHIT is also planning to raise debt through the issuance of bonds in the current financial year. The size of the bond issue is still being finalised, but it could be in the range of INR 2,000 crore to INR 3,000 crore, as stated by the sources.
This amount will be double the INR 1,500 crore raised through bonds by NHIT in October 2022, which marked its first attempt to raise debt from the public for an asset monetisation programme.
NHAI is the sponsor of NHIT, holding 15.48% of units. Other unitholders include the Ontario Teachers' Pension Plan and Canada Pension Plan Investment Board, each with 25%, SBI Mutual Fund with 9.67%, and SBI Pension Fund Scheme with 2.06%.
According to rating agency ICRA, the identified stretches for monetisation by NHAI have a monetisation potential of INR 53,000 to 60,000 crore. However, officials are sticking to a conservative target because the monetisation of all stretches may not be possible within the year.
Under the National Monetisation Pipeline (NMP), road sector monetisation was expected to account for INR 1.6 trillion, or 27% of the total monetisation during FY2022-FY2025. By FY2024, NHAI and the Ministry of Road Transport and Highways had realised around INR 53,541 crore through ToT and InvIT. Since the highway monetisation programme began in 2018-19, NHAI has raised INR 1.08 trillion through the recycling of assets.
The NHIT's plans to raise additional funds through bonds highlight the ongoing efforts to leverage private investment for infrastructure development. This strategic move aims to sustain the momentum in highway construction and enhance the financial stability of the NHAI. The conservative approach taken by officials in setting monetisation targets reflects a cautious optimism, ensuring realistic and achievable goals are set for the fiscal year.
As the financial year progresses, the success of this monetisation drive will be closely watched. The outcomes will not only impact the NHAI's financial health but also set a precedent for future infrastructure funding initiatives. The collaboration between the public and private sectors in this endeavour underscores the importance of innovative financing mechanisms in achieving large-scale infrastructure development in India.
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