New Delhi: After months of negotiations, the National Highway Authority of India (NHAI) has finally managed to raise Rs8,500 crore from Life Insurance Corporation (LIC) for a period of 30 years at an interest rate of 7.22% per annum.
A senior NHAI official confirmed the move. “The sum is a part of the market borrowings permitted by ministry of finance for the current financial year and the deal was closed on Tuesday,” the offical said.
He added that to finance various highway projects, NHAI had to raise Rs 55,000 crore in the current financial year.
The official said the NHAI bonds being offered to LIC are the highest-rated paper backed by sovereign guarantees with a yield of 70-80 basis points higher than government securities. One basis point is one-hundredth of a percentage point.
Out of this, Rs10,000 crore through EPFO and Rs8,500 crore from LIC has been raised. The remaining Rs5,000 crore each through masala bonds and Rs16,500 crore from the market is still under process.
As per data available, NHAI has already managed to raise additional Rs11,929 crore through investors availing capital gains exemption (outstanding as on 31 October 2016).
The huge sum is required as highways minister Nitin Gadkari has decided to more than double the rate at which national highways are being built—from 16km a day to 41km a day in the financial year 2016-17. This is around 2.5 times the current rate of construction.
The road minister had decided to award 25,000km of national highways in FY17 compared with 10,000km in the last finical year, and raised the construction target to 15,000km as against the 6,000km constructed last year. Out of this 25,000km highway award, 15,000km are under the NHAI.
Similarly, NHAI’s target for construction has been fixed at 8,000km for the current financial year.