Centre plans to raise up to Rs 45,000 cr through road monetisation in FY24

The Ministry of Road Transport and Highways, the highest contributor to the Rs 6 trillion National Monetisation Pipeline (NMP), is planning to raise up to Rs 45,000 crore through monetising national highways in 2023-24, a senior government official told Business Standard.

“The target for monetisation through toll-operate-transfer (ToT) is Rs 15,000 crore and through infrastructure investment trusts (InvITs) Rs 15,000 crore. The overall target is Rs 44,000-45,000 crore,” the official said.

While the target in accordance with the Union Budget is lower, the official said the Rs 45,000 crore aim was decided at a meeting with the NITI Aayog, and the ministry would spare no effort to achieve it. The ministry had raised close to Rs 17,000 crore in 2022-23. Two tranches of InvITs have been planned for this fiscal year, and the ministry is working on increasing retail investment in the new investment instrument.

In the previous tranche, the National Highways Authority of India’s (NHAI’s) trust had raised Rs 1,500 crore through bonds, of which 25 per cent was reserved for retail investors.

Meanwhile, the Centre will continue to invest in new projects out of its own coffers in the near-term, with the build-operate-toll (BOT) model seeing a tepid response from private players. “For the NHAI’s new projects, 80 per cent will be executed in the hybrid annuity model, and 20 per cent in engineering procurement and construction (EPC) mode. However, road wing projects are mostly done on an EPC basis,” the official said. 

In 2021, the NITI Aayog had envisaged almost a fourth of centrally operated highways to be put up for monetisation.

“The length of highway assets considered for monetisation (26,700 km) constitutes around 22 per cent of the national highways (estimated to be about 121,155 km). This excludes the network operated by the private sector under BOT-based PPP (public-private partnership) concessions,” the planning body had said.

Highways constitute 27 per cent of the NMP, with an expected contribution of Rs 1.6 trillion, according to the NITI Aayog in 2021.

However, sector-wise contributions have undergone internal changes owing to better performance by sectors like shipping and poor performance by some, including the Ministry of Railways, which is supposed to be the second-highest contributor to the pipeline.

With the upcoming completion of several high-value projects, especially under Bharatmala, the ministry is expecting to fetch a big sum because toll income is bound to increase.

“According to current projections, the NHAI’s toll income will rise to Rs 1.25 trillion by the end of 2028-29,” the official said.

In FY23, it was Rs 47,000 crore.

Meanwhile, the ministry is hoping to set a target of 14,000 km of highway construction for the year, which translates into 40 km a day. The official target is being increased from 12,500 km for the year, as Highways Minister Nitin Gadkari was unhappy with the low target sent to him for approval, it is learnt.