Nhai Raises Rs 5,300 Crore Via Bond Issue Till Feb

The National Highways Authority of India (NHAI) has raised around Rs 5,300 crore from the market through an issue of capital gains exempt bonds till February this fiscal.

NHAI had set an internal and extra budgetary resources target of Rs 6,200 crore for the current financial year, which factored in around Rs 4,000 crore to be drawn from a line of credit from the Life Insurance Corporation (LIC).

Despite no money being drawn from LIC this fiscal due to a delay in firming up the terms and conditions of the drawal, NHAI has managed to mop up a substantial sum through the Section 54 EC bonds (available on-tap) alone during 2002-03, government officials said.

There has been a delay in the signing of an memorandum of understanding (MoU) with LIC, resulting in no money being drawn so far this fiscal. The delay has arisen on account of LIC having asked NHAI to securitise the entire proceeds from the fuel cess for availing the Rs 6,000 crore line of credit. The proceeds would be used for part-financing of the ongoing National Highways Development Project (NHDP).

According to officials, NHAI is agreeable to opening an escrow account against the annual repayments accruing to LIC rather than securitising the entire cess proceeds.

LIC has also offered an interest rate of 100 basis points over the government securities rate for the long-tenure loan, while NHAI is pitching for a rate of 80 basis points.

Both the issues have delayed inking of an agreement between the two agencies for the activation of the crucial line of credit. Despite the disagreements, officials said talks are on between the two agencies and said a memorandum of understanding for activation of the line of credit should come about soon.

NHAI would be resorting to staggered drawal from the credit line once the MoU is in place, officials said. NHAI is already tapping the debt market for raising money by way of tax-free bonds issue under sections 54 EC of the Income Tax Act, taxable bonds under Section 88 and other debt instruments. The money would be utilised to part-finance the NHDP, which entails four-laning of over 13,252 km of national highways.