NHAI floats SPV to finance, build and operate Delhi-Mumbai expressway

NHAI is currently implementing about 28,000 km under 'Bharatmala Pariyojna' Phase-1. Under this, Delhi-Mumbai Expressway is one of the flagship highways corridors

The National Highways Authority of India (NHAI) on Thursday said it has formed an arm to finance, construct, and operate the Delhi-Mumbai Expressway.

The NHAI said in a statement that the special purpose vehicle (SPV) has been registered as DME Development and will be wholly owned by the highways authority.

By floating an SPV specific to a corridor, the NHAI is aiming at diversifying its resource base and developing a sustainable and self-liquidating approach to raise finances.

The NHAI is currently implementing about 28,000 km under the Bharatmala Pariyojana Phase 1. Under this, the Delhi-Mumbai Expressway is one of the flagship highway corridors.

Spanning 1,275 km, it will be an eight-lane expressway, with provision to expand to 12 lanes in the future, with a design speed of 120 km per hour. It will be India’s longest greenfield expressway, the NHAI claimed.

The corridor will be completely access-controlled with closed tolling.  A network of 75-wayside amenities is also planned on either side of the expressway at an interval of 50 km. The project has a capital cost of Rs 82,514 crore, which includes land acquisition cost of Rs 20,928 crore.  Considering the significance of the project, the authority has decided to invest the full equity and proceed with the development.

The SPV will raise debt on its balance sheet, while the NHAI retains the operational control during construction and operations and maintenance.  In addition, the toll on the projects housed in the SPV will be collected by the NHAI and the SPV will get annuity payments without any construction and tolling risks.  The completion of the expressway is projected by March 2024.

The NHAI plans to form similar SPVs for other high-value highway projects. These will further enhance NHAI’s capabilities to execute large-scale infrastructure projects of national importance.

The Bharatmala programme envisages construction of 20,000 km of roads at an estimated investment of Rs 7 trillion. In the first phase to be undertaken over three to five years, the project will cost Rs 5.5 trillion. It will be funded through various sources, including Rs 2.09 trillion from the market, Rs 1.06 trillion through private investment, and Rs 2.19 trillion from the central road fund or toll collection.