NHAI turns down NITI Aayog's request to expand monetisation portfolio

Says call on monetising projects taken by independent investment manager

The National Highways Authority of India (NHAI) has turned down NITI Aayog’s request to expand its monetisation portfolio, as the authority intends to leave that decision to an investment manager.

NITI Aayog and the department of investment and public asset management (DIPAM) had asked the NHAI to proactively identify assets, and the mode for monetisation, after the authority showed reservation on the number of projects it could monetise.

NITI Aayog had asked the NHAI to explore more models for monetisation other than the infrastructure investment trust (InvIT) route.

The NHAI is said to have stated, in discussions with the NITI Aayog, that it can monetise about 7,000 km over the next four years. The planning body asked it to proactively identify more assets that could be monetised.

“NITI Aayog wanted to know the number of projects to be offered for monetisation, the length and mode of construction of those contracts,” an official told Business Standard.

The NHAI had said the decision to monetise the projects, their length and the mode was taken by an independent investment manager.

“The investment manager is autonomous and cannot be seen as a government body by the international investor, for it decides the length of projects to be offered,” the official said.

Central government ministries have been given a target of Rs 2.5 trillion for monetising their assets over the next three years, starting 2021-22, which will be a part of the National Monetisation Pipeline. The target for the ministry of road, transport and highways has been set at Rs 30,000 crore.

Union Finance Minister Nirmala Sitharaman, in her Budget speech, said the NHAI would monetise at least 12 highway stretches before 2024 to raise more resources. These stretches comprise over 6,000 km of highways. Besides the Toll operate Toll (ToT) route, the NHAI is also monetising through the InvITs.  

The NHAI has so far come out with three tranches for road monetisation, with the first bundle of nine projects, totalling 681 km of highways in Andhra Pradesh and Gujarat, becoming a success. It was awarded in 2018.

Foreign investors showed huge interest and the first ToT bundle was awarded to Macquarie for Rs 9,681 crore, which was 1.5 times higher than the NHAI’s estimate.

The second bundle of over 586 km spread over four states — Rajasthan, Gujarat, West Bengal and Bihar — with 12 toll plazas across four highways — was also offered in 2018, but later annulled.

Singapore-based Cube Highways had emerged the winning bidder for the government’s third round of road monetisation programme, quoting a price bid of Rs 5,011 crore in 2019.

With a view to expanding the project base available with NHAI for monetisation under ToT mode and for raising finance against toll receipts from identified public funded/hybrid annuity model (HAM) projects through securitisation, the Cabinet Committee on Economic Affairs (CCEA), had in November 2019, accorded approval to NHAI to vary the concession period between 15 and 30 years, depending on project features