$2bn WB loan will lower NHAI’s borrowing needs

$2bn WB loan will lower NHAI’s borrowing needs

New Delhi: The $2 billion World Bank loan the government is seeking for road development will reduce the total borrowing needs of the National Highways Authority of India (NHAI) by 20% to Rs1,53,421 crore over the next 21 years.

“If we get the $2 billion loan from World Bank, the total money that NHAI will have to borrow until 2030-31 will come down to only Rs1,53,421 crore," a transport ministry official said.

“The ministry is seeking the loan at a lower interest rate of 6.5% with a longer repayment tenure of 25 years," he said.

Road transport and highways minister Kamal Nath had said earlier this month after a meeting of an empowered group of ministers that the government wanted to borrow $2 billion.

The official said that the longer tenure would prevent the government from borrowing every few years to repay this loan and the lower interest rate will also result in lesser fund outgo towards repayment, cutting down the overall borrowing needs of the authority.

The World Bank lends to the government at prevailing market rates, which currently stands at 9-9.5%, with a usual repayment tenure of around 10-12 years.

A report by the B.K. Chaturvedi Committee, constituted in August this year to address issues plaguing road development, has pegged the total borrowing requirement of the NHAI till 2030-31 at a cumulative Rs1,91,948 crore.

Nath had said the loan would be in addition to $2.96 billion the World Bank has already approved ‘in principle´ to the government for road development.

“This loan is in advanced stages of getting sanctioned," Nath had said after meeting World Bank chief Robert Zoellick who had visited India in December first week.