NHAI debt burden surges

With the government focusing on road building, a key benchmark of economic activity, the money borrowed by the National Highways Authority of India (NHAI) has jumped a little over 18 times to ~620 billion since 2014, the year the current government came to power.

The NHAI’s borrowing was ~33.4 billion in 2014-15. This has raised concern on the size of the debt burden. The NHAI has moved away from a purely toll-based Build, Operate and Transfer mode for getting projects going to a Hybrid Annuity Model (HAM). Besides the latter, projects are also undertaken on the EPC (engineering procurement and construction) method, where projects are fully funded by the government.

With HAM, the private sector made a comeback to road construction but the government's debt burden has increased. The central government provides equity of 40 per cent for these projects and disbursement is linked to the physical and financial progress.

The NHAI recently finalised a loan for ~250 billion with State Bank of India as part of its fund raising for the current financial year.

“We are ready with our ~100billion bond issue for the domestic market and have already raised ~50 billion and ~40 billion, respectively, from National Small Savings Fund and Life Insurance Corporation,” an NHAI official said.

Any funding, he added, had to be timed well. "We should be able to get a good rate. That is our only concern at the time of arranging finances," he explained.

According to another official in the know, NHAI has also filed for medium-term notes worth ~250 billion in the international market.