Delhi-Mumbai expressway model to replace BOT mode in some projects

The project-based funding model or the special purpose vehicle (SPV) model of the National Highways Authority of India (NHAI) will replace some projects the authority had earlier envisaged to set up on a build-operate-transfer (BOT) mode.

It is learnt that the replacement is being done after several considerations, including keeping the financial aspect of the project in mind.

For instance, if the project comes up on SPV mode, the funds would be raised by that SPV directly instead of the NHAI or the concessionaire. This arrangement provides relief to both the authority and the project developer as the proposal reduces the financial pressure on the parties.

"The projects that are expected to be brought under SPV mode include a road stretch in Karnataka. We are evaluating other such projects that were earlier envisaged to be offered under the BOT mode but will now be offered via the SPV route," said an official.

The authority also hopes for better participation from the project developers under this offering.

The Delhi-Mumbai expressway (e-way) was the first project to be transferred to the SPV. The estimated cost of the project, which will connect Delhi and Mumbai on a new alignment, is around Rs 90,000 crore.

The NHAI plans to diversify its resource base and develop a project-specific sustainable and self-liquidating approach to raise finances, with the help of the SPV.

The project under the Bharatmala scheme is being executed as 48 sub-projects. Of the total, 17 contracts on the Mumbai-Vadodara section are being executed on the hybrid annuity model mode. The other 31 stretches from Vadodara to Delhi are being built under the engineering, procurement, and construction mode.

As many as 27 sub-projects are under construction; 17 have been awarded, but work is yet to commence. The rest of the projects are yet to be awarded.

The project is scheduled for completion by March 2023, with one of the stretches to Jawaharlal Nehru Port (or Nhava Sheva Port) getting completed by September 2023, the NHAI had said.

Land acquisition comprises around Rs 20,600 crore of the total project cost.

The NHAI had said that the expenditure - other than land acquisition during the construction period - would be around Rs 53,849 crore and would be funded through Rs 48,464-crore debt and Rs 5,385-crore equity from the NHAI, with a debt-equity ratio at 9:1.

Annuity payments to the Delhi-Mumbai e-way would be structured to enable timely servicing of debt and other incidentals

The NHAI plans to form similar SPVs for other high-value e-way projects, which would further enhance its capability to execute large-scale infrastructure projects.