NHAI Need To Raise Rs 2.6 -2.8 lakh Cr Through Road Asset Monetisation in 4 Years

Chennai: In order to achieve the government’s road development target of 6000 km per annum, National Highways Authority of India requires Rs 11-12 lakh crore for the next four years. NHAI will have to raise Rs 2.6 to Rs 2.8 lakh crore through road asset monetization.

Crisil expects that around Rs 20 lakh crore investment is required for road projects in the next four years. Of this, NHAI will be investing Rs 11-12 lakh crore. Govt will be a strong partner as 60 per cent of the investment is expected to come through budgetary support.

Monetization of existing road assets will be a key mode to bring in investments. NHAI has a monetizable asset base worth Rs 3.5-4 lakh crore.

“In roads, which have a significant multiplier effect on the economy, a pick-up in project awarding will be important to revitalise the sector’s growth. For NHAI to reach its previous highs of 6,000 km per year of awards and execution, a substantial rise in private capital through acceleration in asset monetisation will be essential,” said Manish Gupta, Deputy Chief Ratings Officer, Crisil Ratings.

Till now Rs two lakh crore has come in as both equity and debt by monetizing road assets by NHAI.

“We expect the share of monetisation in NHAI’s sources of funds to grow to 18 per cent in this fiscal and next, compared with 14 per cent in the preceding two fiscals. For the next four years, NHAI will have to garner Rs 2.6 -2.8 lakh crore through road monetization,” he added.

Two routes are there for road asset monetization – Build-Operate-Transfer and InvITs.

In the past couple of years, NHAI has seen good participation by both domestic and foreign players in InvITs. “NHAI has stated that asset monetization in the form of BOT and INVITs will continue to be a key mode to bring in investment. The market is also open to participate in these investments.

However, possible delays in monetisation on account of approvals or mismatches in valuations, can lead to slowdown in sectoral growth.