The National Highways Authority of India (NHAI) Chairman NN Sinha on Wednesday said that the authority would not go in for borrowing if the government increased its allocation to the road sector.
“If more budgetary resources are released, which authority would prefer mobilising funds from the market, ” Sinha said at a CII event here.
He was responding to media reports on the financial stress being faced by NHAI in the last couple of weeks.
On the issue of Rs 3 trillion contingent liability of NHAI, as suggested by some media reports, Sinha said, “Either people don’t understand what is contingent liability or the numbers have been over reported.” The authority’s debt is expected to touch Rs 2.5 trillion by the end of the current financial year and the payment outgo on interest is expected to be roughly Rs 25,000 crore annually for the next two decades or so.
NHAI’s source of income includes toll revenue and the government grants. Starting last year, NHSAI started monetising completed projects. Around Rs 8,000-9,000 crore is expected to come from tolling. This revenue is mainly used for the maintenance of highways.
NHAI’s borrowing target has been hiked by 21 per cent in 2019-20. The authority has the approval to raise Rs 75,000 crore during the current year while government support is Rs 36,691 crore.
In FY19, NHAI raised Rs 62,000 crore through a mix of debt from banks, toll revenue, and a road monetisation schemes. If NHAI monetizes its assets it would lead to a steady decline in its toll collection as the agency which undertakes the operation and maintenance of the projects will be the beneficiary of toll.
NHAI’s financial stress had become a concern with Prime Minister’s Office recently stepping in with its suggestions for the authority. PMO asked the Ministry of Road Transport and Highways (parent ministry of NHAI) to improve its operational performance.
The PMO also suggested that NHAI monetize its road assets base through toll-operate-transfer (TOT) auctions or through an infrastructure investment trust (InViT). It asked NHAI to bid out new projects under the build-operate-transfer (BOT) model where the government’s capital commitment is minimal.
