Chennai: Innovative funding modules are on the anvil for the ambitious Rs 7.5 lakh crore highway building programme as the sector can help achieve Prime Minister Narendra Modi’s dream of making India a $5 trillion economy, Union minister Nitin Gadkari said.
The Road Transport and Highways Minister was addressing the media after the signing of an MoU between the National Highways Authority of India (NHAI) and the National Investment and Infrastructure Fund (NIIF) to tap innovative methods of financing, including overseas pension funds.
The NIIF and European highway concession manager Roadis in April had announced the creation of a platform that will invest up to $2 billion in highways projects in India.
“NHAI is raising finances for its mega projects, and is not dependent only upon budgetary support. Several funding models were adopted in the past towards this, which have yielded good results. The MoU with NIIF will provide innovative financial models including for the 24,000 km Rs 7.5 lakh crore Bharatmala Pariyojana,” Gadkari said.
The Minister exuded confidence that the road sector can contribute in a big way in achieving the Prime Minister’s dream of making India a $5 trillion economy.
MD and CEO, NIIF, Sujoy Bose said the fund will look at TOT (toll-operate-transfer) bundles put on offer by NHAI besides hybrid annuity mode and will try to get institutional capital for highway projects.
NIIF is a fund promoted by the Government of India to give a boost to the infrastructure sector in the country. This arrangement of innovative alternate source of funding is being looked into by NHAI to attract international investors and fund houses who are willing to invest in road projects in India but are not very keen to take risk related to the project execution.
This arrangement is expected to bring in a huge amount of investment at an economical rate for highway development in India and reduce the stress of borrowing on NHAI balance sheet also.
The MoU is related to cooperation in the formation of special purpose vehicles (SPV) to execute the fund arrangement for large size road projects particularly greenfield projects to be executed by NHAI in future.
Minister of State for Road Transport and Highways, V K Singh, welcomed the coming together of two big entities – NHAI and NIIF, and expressed satisfaction at the pace of development in the country’s infrastructure sector.
| The other eye |
| Logistics and transportation contributed to about an estimated 14 per cent of Indian GDP as of March last year. The number is higher than that found in a few developed nations like the US and Germany, where it is around eight per cent. With almost 60 per cent of the freight transport in India happening by road, truckers, using light and heavy duty trucks transport 3,500 million metric tonnes every year in the country. By this year, freight movement is expected to have risen by a further 15 per cent. |