“The NHAI plans to monetize about 1,200km of roads this calendar year. The first will be the InvIT (infrastructure investment trust), which it is ready to launch in the coming months. I believe the first tranche will be about 600km and depending on how successful that is, they can bring in more assets later," one of the two people said. “The second will be 3-4 bundles under the toll-operate-transfer (TOT) route of about 150km each. NHAI will make these bundles smaller than in previous rounds to suit investors."
Tapping these two routes, the agency hopes to raise at least ₹10,000 crore by December, the person said.
NHAI has had a chequered relationship with the TOT model, ever since it was debuted in 2016. The TOT model was introduced to monetize publicly-funded highways, where investors could make a one-time payment for toll collection rights for 30 years. NHAI has successfully completed two rounds of such auctions since the programme was launched, raising ₹14,700 crore, but has failed to generate enough interest in two subsequent attempts. Its most recent TOT bundle, last September, was abandoned when the auction failed to attract even a single bid after waiting a whole year.
“NHAI has responded to investors’ concerns regarding problems with previous auctions," the second person said. “Investors are looking for smaller stretches of roads that are geographically close to each other, which makes it easier for them to manage. They also want shorter concession periods, and the NHAI has been willing to reduce the length from 30 years to 20 years. They might also decide not to set a reserve price, which investors have failed to meet in the past."
The NHAI’s maiden InvIT is another path in alternative finance the agency intends to take to raise much-needed funds. An InvIT manages income-generating infrastructure assets, typically offering investors regular yield and a liquid method of investing in infrastructure projects.
NHAI’s InvIT was approved by the Union cabinet in 2019 and preliminary documents for the public issue were filed with the Securities and Exchange Board of India last year.
In an interview to Mint in January 2020, Nitin Gadkari, Union minister for road transport and highways, had said the InvIT would launch with a preliminary issue of ₹15,000-20,000 crore.
For NHAI, it’s vital to keep these modes of financing open and available even to keep project awards under Bharatmala Pariyojana on track. The agency’s total debt swelled more than three times to ₹2.49 trillion as on March-end 2020 from ₹75,385 crore as on March-end 2017, according to data from credit rating agency Icra. The borrowings are expected to surpass ₹3.5 trillion by FY23 to fund the Bharatmala Pariyojana programme, part of the National Infrastructure Pipeline.