The National Highways Authority of India (NHAI) is set to raise more than 85,000 crore by fiscal year 2025 through the toll-operate-transfer (ToT) model and infrastructure investment trusts (InvITs), Union minister of road transport and highways Nitin Gadkari said.

Under the ToT model, long-term concessions for collecting toll revenues are auctioned to the highest bidder, while InvITs are investment schemes similar to a mutual fund that allow investment from individuals and institutional investors in infrastructure projects to earn a portion of the income as return. These models are more attractive for investors as they don’t have to build an infrastructure project from scratch.

NHAI will rely on monetizing assets as a source of funds in the coming years and the need to build national highways will reduce with the completion of the government’s ambitious Bharatmala road project, Gadkari said in an interview on Thursday.

“After the completion of the Bharatmala Pariyojana, the need to construct national highways will come down. NHAI would then be more focused on road asset management, including asset monetization, contract management, operation, and maintenance of existing highways with capacity augmentation wherever required," Gadkari said.

The move comes against the backdrop of the prime minister’s office (PMO) sending a note to road transport secretary Sanjeev Ranjan, proposing ways to improve the operational performance of NHAI. In the letter dated 17 August, the PMO raised concerns that the NHAI is “totally logjammed by an unplanned and excessive expansion of roads and it is mandated to pay much higher costs for land acquisition and construction". NHAI should focus on aggressive monetization of assets through the ToT model and InvITs, reorganize its portfolio of roads, and review the commercial orientation of projects, said the note from the PMO.

It suggested that NHAI should be transformed into a road asset management company and create a blueprint for a national highway grid to see which roads can be built by 2030. It suggested that NHAI should bid out new projects under build-operate-transfer model, where the government’s capital commitment would be minimal.

NHAI is working on raising long-term finance from banks by securitizing the user-fee receipts from toll plazas as an alternate mode of asset monetisation, Gadkari said. “NHAI is working on an investment model of floating special a purpose vehicle (SPV) for value capture financing in respect of greenfield projects. NHAI has signed a memorandum of understanding with the National Investment and Infrastructure Fund (NIIF) for formation of an SPV with equity contribution from institutional financial investors," he said.

“Debt will be raised by the SPV to ensure off-balance sheet funding of projects. The construction risk will be borne by NHAI," Gadkari said. The road ministry is also in the process of gathering market feedback for this model, he said.

The Union government had in 2015 set up NIIF to fund commercially viable greenfield, brownfield, and stalled projects, to give a boost to the infrastructure sector.

Gadkari said also that Saudi Arabia has offered to invest $100 billion in India’s infrastructure sector. Towards this end, the ministry has suggested a portion of this funding be invested in the SPV being set up by NHAI and NIIF. “These funds could be utilized for construction of Bharatmala expressways," he said.

On phasing out of older, polluting vehicles, Gadkari has given an in-principle nod to the voluntary vehicle scrapping policy.

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