National Highways Authority of India (NHAI), the apex body for construction and management of national highways in the country, plans to pay back about half of its outstanding debt worth ₹3,42,801 crore (as on March, 2023) in the next seven years. As per the debt reduction plan of the authority, ₹1,88,717.42 crore will be redeemed by 2030, while the entire amount will be redeemed till 2050.
According to sources close to the development, the authority will redeem outstanding principal worth ₹6,225.77 crore in the current financial year and the amount will be enhanced to ₹16,127.88 crore in FY25, followed by ₹18,503.57 crore in FY26. Till 2030, the total redemption including the amount of interest will be to the tune of ₹3,59,820 crore.
The authority will pare the debt using proceeds from toll receipts from the national highways projects, revenue and premium received from the build operate and transfer (BOT) projects, and asset monetisation and securitisation. Asset monetisation is being done by the NHAI through toll operate and transfer (ToT), and infrastructure investment trust (InvIT).
“From ToT, InvIT and securitisation, we expect an annual revenue of will be to the tune of ₹45,000 crore which will be utilised for debt mitigation. Also, almost 150 BoT (Toll) projects will come back to the NHAI adding to the toll revenue pool of the authority. Two to three projects have started coming back to the authority,” said the source.
BoT (Toll) model is a public private partnership (PPP) model of highway development developed under the Congress-led UPA regime. Under the BoT (Toll) model of project awards, a two stage competitive bidding – technical and financial – formed the basis for awards of the project for a concession period. BoT Toll model allowed grant of viability gap funding up to 40% of the project cost, while the developer raised the balance fund. Under the model, the private players maintain and earn the toll revenue from the project thereby earning return on investment. After the end of the concession period, the project is vested back to the government and the toll revenue then starts accruing to the government.
The official expressed confidence that NHAI will not face debt servicing issues going forward. “The average borrowing cost of the NHAI is 7.70% while the internal rate of return is above the borrowing cost,” the source pointed out. It may be noted that the centre has not mandated NHAI to raise funds in FY23 and FY24.