NHAI aims to double its borrowing from National Small Savings Fund

This year, the National Highways Authority of India (NHAI) aims to double its borrowing from the National Small Savings Fund (NSSF).

The NHAI took Rs 20,000 crore from the NSSF in 2018-19. Its plan is to raise about Rs 40,000 crore from the latter during 2019-20, as part of a Rs 75,000-crore borrowing plan for the year. It further aims to raise a similar sum in the coming yeaRs , to keep the momentum on construction of highways and expressways, an official in the know told Business Standard.

 “We are exploring all avenues to secure finances for our projects, as we feel nothing should come in the way of seamless execution,” the official said. 

According to the proposal, the NSSF would release the money in periodic tranches of Rs 5,000 crore. The NHAI has sent the proposal to the NSSF and is awaiting clearance. Part of a broader exercise to secure financing for its projects, be it EPC (engineering, procurement, and construction), hybrid-annuity or the soon-to-be-revived build-operate-transfer or BOT. Established in 1999, the NSSF pools money from different small saving schemes of the government. 

This is usually invested in central and state government securities.

Recently, NHAI Chairman N N Sinha said they’d raise Rs 25,000 crore from Life Insurance Corporation (LIC) of India during the year. LIC has offered a credit line for this much to fund highway projects.

The funds are expected to be raised for 30 yeaRs  and the interest rate will be revised every 10 yeaRs . The borrowing is likely to be in the form of bonds to be issued by NHAI.

It is also learnt that NHAI would soon raise funds through the issuance of rupee-denominated bonds in offshore markets. The amount of fund raising via this 'masala bond' route would be lower than via NSSF or LIC.

“By next month, we should be able to finalise the masala bond issue,” an official said, adding the amount to be raised would be around Rs 5,000 crore.

After finalisation of fund raising through these – LIC, NSSF, masala bond – routes, NHAI would be able to almost complete its external financing target of Rs 75,000 crore for the current financial year.

The year's Union Budget allocates Rs 36,691 crore for NHAI. The finance ministry had approved a 21 per cent hike in fund raising for NHAI in 2019-20 as the government prepares to execute its ‘Bharatmala’ project. In 2018-19, Rs 62,000 crore was raised, a mix of debt raised from banks, toll revenue and a road monetisation scheme. Overall allocation for NHAI has risen in the past couple of yeaRs , and the authority’s IEBR (Internal and Extra Budgetary Resources) has increased.   In FY18, this was Rs 50,532 crore. It went up to Rs 62,000 crore in FY19 and to Rs 75,000 crore in FY20.