NHAI’s Asset Recycling Plan is Gaining Attention

The infrastructural development in India has been in a good shape owing to the gradually rising demand. Even Agricultural and Service sectors are relying on the status of the infrastructural growth. This shows how important this sector is for the overall development of a nation or society. The Government of India (GoI) has been coming up with different programs and initiatives to boost the infrastructural growth in the country. The recent among its slew of initiatives is ‘Asset Recycling’ plan.

The National Highways Authority of India (NHAI), which was bestowed with the responsibility of development and maintenance of the major chunk of national highways, is a statutory and autonomous body under the aegis of Ministry of Road Transport and Highways (MoRTH). It has been leading the pack by coming up with initiatives to boost the efficiency of its commuter-centric services. A lot of tech-based initiatives were taken in the past and most of which were proved successful encouraging the NHAI to maintain the momentum.

Its recent project pertaining to infrastructural development is Wayside Amenities Project. It has been launched with an aim to make use of the vast tracts of land abutting national highways. It is one of the largest projects, which has been executed by the NHAI under the Public-Private Partnership (PPP) model. But more often the NHAI finds funding as a major cause of concern in its mission to develop national highways of India on par with the global highway networks. So, of late it has come up with ‘Asset Recycling Plan’, which is first of its kind in India.

Under Asset Recycling Plan, the NHAI will call bids for private players to develop and maintain a particular stretch of national highways under Toll-Operate-Transfer (TOT) model. So, with this model, the NHAI would receive capital amount and using which it could develop the next generation assets without any upfront investment. Under this model, the concessionaires/contractors/developing parties pay one-time concession amount and for which the NHAI would be granting them with Toll collecting rights for 30 years or predetermined time period in the agreement. Also, the NHAI will ask the other party to maintain proper operational standards to serve the interests of public/commuters.

The NHAI has received unprecedented bid offer of 9,000 crores, which is 50% more than its estimates, for the maintenance of 680 Km length of national highways. This has set an example for future monetisation of public projects related to all departments. Along with this initiative, the Hybrid Annuity Model (HAM) is also attracting the interests of global and local players, which is a positive sign. At a time, when the global infrastructure sector is reeling under financial crisis, this kind of initiatives will provide an opportunity to the interested players as the risk factor is very low in these models. The other departments and ministries can take a cue from the Asset Recycling Plan as it has already garnered much attention in the highways realm.

Using fundraising models of this kind, the NHAI could stabilise its future capital related dynamics and serve commuters in a better way than ever.

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