The National Highways Authority of India (NHAI) is now looking to ramp up its highway monetization program worth INR 45,000 Cr in the current financial year which is FY25. The Cumulative length of the Highway is 2741 KM spanning over 12 states.
The methodology adopted for Monetisation
The NHAI will utilize 2 primary methods for monetization namely: Toll Operate Transfer (TOT) and Infrastructure Investment Trusts (InvIT). In TOT, the private entities will be getting the right to collect the tolls for a specific period by paying NHAI upfront cash. The valuation for this purpose will be determined through competitive bidding.
InvITs, which offer tax benefits to investors, purchase the highway from NHAI and operate it. Investors receive returns on their units based on toll collections.
Also Read | Indian Real Estate Market Witnesses Remarkable Growth, Predicts Trillion-Dollar Industry by 2030
What is an Infrastructure Investment Trust (InvIT)?
An InvIT is a pooled investment vehicle (just like a mutual fund) that raises funds from investors by issuing units according to the regulations framed by the Securities and Exchange Board of India (SEBI) and invests the proceeds in infrastructure assets as per defined investment policy.
NHAI’s Track Record in Monetization
The NHAI has successfully achieved its monetisation targets in recent years. In FY24, it monetized highway assets worth INR 40,314 Cr through TOT, InvIT and toll securitization for specific projects. NHAI has been one of the few infrastructure departments of the government to achieve its monetization target on time. This is as per the phase provided by NITI Aayog under the National Monetization Pipeline (NMP) launched in 2021.
Flexibility and Potential Targets
However, the discretion to modify the list of stretches and choose monetization methods based on their plans has been retained by the NHAI itself. While the final figures may change based on annual reviews experts expect the Ministry of Road Transport and Highways’ target to be around INR 53,000 Cr worth of national highways offered for private participation through TOTs and InvITs.
Standalone Debt Securitization for Expressways
The NHAI is exploring the debt financing options for the expressway project without relying on comfort from the authority itself. This could potentially unlock new avenues for funding these critical infrastructure projects.
