Fund mobilisation: NHAI to float arms, start listing process in early FY19

Keen on mobilising funds to accelerate the pace of highway construction, the National Highways Authority of India (NHAI) will tap the capital market in early FY19 through a few subsidiaries that would be created. Being an authority, it cannot have an initial public offer (IPO) on its own.

“We are now thinking of forming subsidiaries. The process might start early in the next financial year,” NHAI chairman Deepak Kumar told FE.

Under the plan, the authority will create various divisions — one each for highways, expressways, roadside amenities etc — and incorporate them. Kumar said the process would require prior approvals of the ministry of road transport and highways (MoRTH) and the Cabinet.

Apart from Budget support, which includes its share of the road cess proceeds and toll revenue, the authority has conventionally raised debt through taxable and tax-free bonds to fund construction of highways and expressways.

While both budgetary support and fundraising through debt have been on the rise for the authority, the workload given to NHAI has also been increasing, in line with Centre’s ambitious target to step up highway construction to 41 km/day from around 23 km/day achieved in the last fiscal. For the current fiscal, NHAI has been assigned to construct 3,500 km of highways and award 6,500 km of projects against its actual achievement of 2,628-km construction and 4,335-km project awards last fiscal.

NHAI has, till November-end, tendered out 7,400 km and hopes to take the tally to 10,000 km by January-end. After a tender, it requires to fulfill some conditions like land acquisition before awarding a project. Though it has land in most cases, some projects are stuck for lack of possession of land (projects can be awarded only after 90% of the required land is acquired).

Kumar said awards this fiscal could be close to the targeted 10,000 km. From tendering to awards, it takes between 15 days to two months, he said.

On the construction side, NHAI has built 1,700 km of highways till November and hopes that the target of 3,500 km for the current fiscal will be met.

National Highways Authority of India