The National Highways Authority of India (NHAI) has initiated another round of monetisation of its assets by calling for bids for 375 km long three highway stretches in the states of Telangana and Tamil Nadu.
The monetisation will be done through Toll Operate Transfer (ToT) model. Two highway stretches in Telangana have been bundled together in ToT Bundle 16 while one highway is part of Bundle 15.
Two highway stretches totalling 251 km on the Hyderabad-Nagpur corridor in Telangana have been offered to private bidders in Bundle 16. In Bundle 15 one 124 km stretch on four lane Trichy-Tovrankurichi-Madurai section is on offer.
The last date for submitting bids for both the bundles is February 28 and as the process of monetisation through ToT takes time because it also involves the technical evaluation of bids, this round of monetisation will only be completed in the next financial year.
Asset monetisation is a strategically important programme of NHAI to help it raise additional resources for its ambitious highway building programme. This helps reduce NHAI’s dependence on the general budget as it has been barred from raising additional debt.
This year the highway building arm of the government has raised Rs 15968 crore by monetisation through ToT as against the budget target of Rs 10,000 crore.However, internally NHAI was aiming for higher proceeds of around Rs 10,000 to Rs 15000 through this route.
The highest bidder for highways through ToT gets to collect the toll on the stretches for 20 years in lieu of upfront payment. They are also required to maintain and operate the stretches. The first award of highways under ToT was done in 2018. Since then Rs 42,334 crore has been raised through this route by transferring 2287 km of highways to outside investors.
This mode of monetisation has generated considerable interest with some of the biggest names in investing like IRB Infrastructure Trust, KKR, Abu Dhabi Investment Authority-backed funds, National Investment and Infrastructure Trust (NIIF) and Adani Group participating in the bids.
Overall budget target for monetisation this year is Rs 35,000 crore. Other modes of monetisation are Infrastructure investment trust (InvIT) and asset backed securitisation. Monetisation through InvIT is done through National Highways Infra Infra Trust (NHIT) which has been sponsored by NHAI itself.
NHIT takes over highway stretches from NHAI in lieu of upfront payment. Currently the process to monetise 11 highway stretches in the third round of InvIT is in progress. Other shareholders in NHIT are Ontario Teachers’ Pension Plan and Canada Pension Plan Investment Board which hold 25% each. NHAI’s holding in NHIT is 15.86% and SBI Balanced Advantage Fund holds 9.86%.