NHAI is Mulling to Pull Equity Investors to Finance Highway Projects

The investment climate in India is taking positive turn day on day. As investors see a ray of hope in Indian markets, many investments pour in across many core sectors. The National Highways Authority of India is contemplating this situation on how the highway sector could benefit out of this context. Accordingly, it has come up with a plan to rope equity investors to finance its development projects.

The National Highways Authority of India (NHAI), a statutory body of Government of India, is an autonomous authority under the aegis of Ministry of Road Transport and Highways (MoRTH), which was assigned with the development and maintenance of the assigned national highways. From its inception, it has been innovating new ways in fulfilling its responsibilities.

In its mission to revamp the national highway network, the NHAI is leaving no stone unturned. It has been experimenting new financial models to fund its massive projects. Recently it started experimenting financing models like Hybrid Annuity Model (HAM) and Toll-Operate-Transfer (TOT). Now, it is mulling to look for "equity" investments in the highway sector.

• Under Hybrid Annuity Model, the Government itself would be providing an upfront investment of 40% to the developer and the rest would be paid in installments. This model is first of its kind in the highway sector in India. This model of investment could shed fears of investment-related returns as the government would be promising returns.
• Toll-Operate-Transfer (TOT) is one such innovative financial model that would solve multiple problems at a go. It is part of NHAI’s Asset Recycling Plan, wherein both the NHAI and the contractors would get benefitted. This model proved more successful and the NHAI has received bids in an unprecedented manner.

Riding high on the positive response it received from TOT model, the NHAI is expecting the same to happen with the equity investments in highway development projects. Around 46,000 crores worth of new projects may be developed through equity investments. The NHAI is even looking to tap Pension funds and National Investment and Infrastructure Fund (If there is a chance).

As the NHAI got immersed in works with ambitious targets, there would be no wonder if it comes with many such innovative financial models.

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