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NHAI to Enter the Realty Frame to Fund Bharatmala Project

Author: Rama Vala
by Rama Vala
Posted: May 24, 2018

The National Highways Authority of India is set to foray into real estate development to fund the highway projects in the current financial year and the ambitious Bharatmala Project. The estimated cost of highway construction is Rs 1.5 trillion and the overall expenditure for the Bharatmala project will exceed Rs 5.9 trillion. Bharatmala Pariyojana is a centrally-funded roads and highways project of the Government of India.

Up until now, only private developers were reaping benefits of this price escalation that resulted from the construction projects initiated by the National Highways Authority of India. The nodal agency of the Government of India will enquire state governments for acquiring land parcels along with project land, and then decide if they have to develop it on its own or auction to raise funds for the Bharatmala Project.

It is also being said that a consultancy firm has been hired to evaluate the idea from all parameters and design a white paper on this under value purchase financing under Bharatmala. A land parcel of 1-2 square kilometres will be sought in and around the ring roads, while land area totaling 5-6 square kilometres will be sought along the greenfield expressways.

A cap is also set to be put on the area where realty development will take place along the highways and ring roads to protect NHAI’s and state governments’ interests. The Bharatmala project covers a network which is 83,677 km wide with the estimated investment in excess of Rs 5.35 lakh crore. The project will build highways connecting Gujarat, Rajasthan, and Punjab, and then the entire string of the Himalayan States namely Jammu and Kashmir, Himachal Pradesh and Uttarakhand. Some border areas of Uttar Pradesh and Bihar are also part of this grand road networking plan. Connecting far-flung border and rural areas is the main agenda behind the initiation of this project. Bharatmala will also raise the number of corridors to 50 (from current 6).

In the run, post-Bharatmala, 232 projects were put on tender covering over 11,200 km of road length with costs exceeding Rs 1,960 billion. The projects granted include a coverage of 1,234 km in Rajasthan, 747 km in Odisha, 739 km in Maharashtra, 725 km in Uttar Pradesh, 511 km in Tamil Nadu, 504 km in Andhra Pradesh, 468 km in Karnataka and balance in other states. It is widely expected that projects with a coverage of around 3000 km will be awarded in the first few months of FY 2018-19 itself.

The NHAI has been brainstorming various methods to fund the Bharatmala project. The Macquarie Group is reportedly ready to make an upfront payment of Rs 9,681.5 crore to manage 648 km of country’s NHs. In the background, NHAI has also been working on an equity-funding model for its upcoming expressway and economic corridor.

#BharatmalaProject #HighwayProjectsinIndia #RoadTransportIndia

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Author: Rama Vala

Rama Vala

Member since: May 15, 2018
Published articles: 6

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