NHAI lines up massive Rs 5.35 lakh cr expenditure plan

Source: Financial Express, Mar 23, 2017

New Delhi: Relying heavily on a planned over-300% increase in annual market borrowings and likely handsome proceeds from leasing out of existing projects under the proposed toll-operate-transfer (TOT) scheme, the National Highways Authority of India (NHAI) has lined up a massive R5.35-lakh-crore expenditure plan for the next three years (FY18-FY20). According to the plan, the authority that implements/ oversees roughly 55% of the highway projects in the country in terms of value doesn’t expect a big turnaround in the sluggish public-private partnership (PPP) segment, with private funds expected to be just 11% of the overall resources available in the next three years (see chart).

Market borrowings, envisaged to be the largest source of funds for NHAI, are estimated at R2.1 lakh crore in FY18-FY20 period, up sharply from around R51,000 crore in the previous three years.

As for toll receipts, conventionally another major source of revenue, NHAI has estimated roughly R11,000 crore to come in annually in the next three years, up 70% over the level in the past three years. This assumes that the ambitious TOT project will fetch upfront revenue of R45,000 crore. Crisil Research on Wednesday said, “The first 75 operational highway projects to be tendered (under the TOT ) model may fetch around R40,000 crore, much lower than what the government had initially estimated.”

NHAI to borrow bulk of R5.35 lakh crore

Budgetary support — which includes capital base, cess fund, and assorted grants — could be of the order of R56,000 crore a year in the FY18-FY290 period, against an average of around R32,000 crore annually in the past three years (FY15-FY17).

Far behind the ambitious targets set for award and construction of highway projects in FY17, NHAI has made the targets for the next three years slightly more realistic. It aims to award around 20,000 km of highway projects and build 15,000 km of such roads over the next three years. Although the authority had aimed to award 15,000 km projects in FY17 alone, it has managed only 3,000 km till February-end; as for construction, only 2,350 km was achieved in the first 11 months of the year against a target of 8,000 km for the whole year.

As FE has recently reported, highways construction, including projects directly implemented by the ministry of road transport and highways, stood at 6,700 km till February-end, or 20.3km per day. During all of last fiscal, India had constructed 6,064 km of highways and just 4,410 km in the year earlier.

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