From road building to logistics, NHAI to get a makeover

Govt wants NHAI to go in for international business

The Union government is planning to enlarge the role of the National Highways Authority of India (NHAI) beyond just highway construction. It not just wants NHAI to go in for international business but also plan for logistics parks. The NHAI’s enhanced role would come along with greater financial autonomy, including raising funds from overseas and renewed focus on building expressways.

Greater financial and decision-making autonomy for the authority would allow it to execute and implement projects and take critical financial decisions independently.

“Diversification of the NHAI’s role is a great idea but first there should be greater autonomy for the body and then diversification. The ministry (of road transport and highways) should distance itself from the authority,” Abhaya Agarwal, partner and PPP leader, EY India, said.

He added the proposal would allow the NHAI to break away from the role of a government-run organisation and function like a corporate that could engage consultants and hire people from diverse backgrounds.

“The central government has been mulling this idea for several years but hasn’t been able to move an inch on its implementation,” a former road ministry official told Business Standard. He said the plan was “very ambitious”.

The NHAI was constituted by an Act of Parliament — the National Highways Authority of India Act, 1988 — to develop, maintain and manage the National Highways vested or entrusted with it by the Central government. It became operational in February 1995. 

According to a road ministry official, the diversification process for the NHAI has already started. The NHAI received global ratings from S&P and Moody’s, which would allow it to raise debt on better terms from the market, besides strengthening its acceptance amongst the investors.
 

The NHAI is currently in the process of raising funds through medium-term notes worth Rs 25,000 crore over the next five years to be listed either on the London Stock Exchange or the Stock Exchange of Singapore.

NHAI plans to utilise the proceeds from the medium-term note (MTN), which usually matures in five to 10 years, for primarily financing the EPC (engineering-procurement-construction) projects that it undertakes.

On the expressways front, work has commenced on the Rs 44,000-crore Mumbai-Vadodara expressway, the official said. The 380 km-long expressway is part of the golden quadrilateral project and passes through various locations in the Thane district of Maharashtra besides the Union Territory of Dadra and Nagar Haveli as well as Valsad, Navsari, Surat and Bharuch in Gujarat. The Union Cabinet has also approved construction of a new expressway, Delhi-Jind-Amritsar-Katra, passing through Haryana and the Delhi-Jaipur road, an extension of National Highway 8.

Besides working in its core area of road construction, the authority would also undertake the development of economic corridors and logistic parks along national highways. The logistics parks would be developed at identified locations in partnership with state governments and NHAI. The plan includes development of Rs 3 lakh crore of economic corridor projects and 35,000 km of highways for faster movement of freight.