Innovative funding modules are on the anvil for the ambitious Rs 7.5 trillion highway building programme as the sector can help achieve Prime Minister Narendra Modi's dream of making India a $5 trillion economy, Union minister Nitin Gadkari said on Monday.
The Road Transport and Highways Minister was addressing the media after the signing of an MoU between the National Highways Authority of India (NHAI) and the National Investment and Infrastructure Fund (NIIF) to tap innovative methods of financing, including overseas pension funds.
"NHAI is raising finances for its mega projects, and is not dependent only upon budgetary support. Several funding models were adopted in the past towards this, which have yielded good results. The MoU with NIIF will provide innovative financial models including for the 24,000 km Rs 7.5 trillion Bharatmala Pariyojana," Gadkari said.
The minister exuded confidence that the road sector can contribute in a big way in achieving the Prime Minister's dream of making India a $5 trillion economy.
NIIF MD & CEO Sujoy Bose said the fund will look at TOT (toll-operate-transfer) bundles put on offer by NHAI besides hybrid annuity mode and will try to get institutional capital for highway projects.
NIIF is a fund promoted by the Government of India to give a boost to the infrastructure sector in the country.
This arrangement of innovative alternate source of funding is being looked into by NHAI to attract international investors and fund houses who are willing to invest in road projects in India but are not very keen to take risk related to the project execution.
This arrangement is expected to bring in a huge amount of investment at an economical rate for highway development in India and reduce the stress of borrowing on NHAI balance sheet also.
The MoU is related to cooperation in the formation of SPVs (special purpose vehicles) to execute the fund arrangement for large size road projects particularly greenfield projects to be executed by NHAI in future.
Minister of State for Road Transport and Highways, V K Singh, welcomed the coming together of the two entities – NHAI and NIIF- and expressed satisfaction at the pace of development in the country's infrastructure sector.