The National Highways Authority of India (NHAI) is planning to raise up to Rs 15,000 crore of tax-free bonds.
“We are looking at mopping up Rs 10,000-15,000 crores in small tranches of Rs 500-2000 crores as and when the need arises,” an NHAI official said, on the condition of anonymity.
The money is to meet viability gap funding and annuity requirements for the Rs 100,000 crore highways projects envisaged by surface transport minister Kamal Nath during 2009-10.
“We proposed to the B K Chaturvedi Committee to consider raising the tax-free bonds on the lines of what India Infrastructure Finance Company did. The proposal has now been vetted by both the finance ministry and ministry of road transport and highways,” the official said.
Interestingly, the roads regulator’s previous attempt to float a bond —- in May this year —- has not been very successful.
It had planned to raise Rs 4,000 crore but could muster up only Rs 220 crore through the bonds, with offered Section 54 EC capital gains benefits under the Income Tax Act.
NHAI is also tapping overdraft facility from banks.
“Three banks have responded to the tender floated by us for availing overdraft facility at an annual interest rate of 7-8%,” said the official. NHAI plans to replenish the overdraft facility through a number of revenue sources such as toll inflows, sale of documents and bid security. It also expects the government to back its debt programme.
“We need the comfort from the Central government so that we get a better deal in terms of interest and also ratings,” said the official. To this effect, the Chaturvedi committee has already recommended that the government should back loans taken by NHAI by proffering a sovereign guarantee to the authority’s borrowing programme. The Planning Commission is now looking at the issue.
Prime minister Manmohan Singh had in August formed a committee on highways headed by Planning Commission member Chaturvedi to look into the issues plaguing the sector. Finance secretary Ashok Chawla and transport secretary Brahm Dutt are also members of the committee.
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