NHAI at a crossroads on debt servicing; 'concerned' PMO raises red flags

According to SBI Caps, the proportion of debt funding has risen sharply in the recent NHAI projects

The National Highways Authority of India (NHAI) finds itself in a spot over its deep financial stress, prompting the Prime Minister’s Office (PMO) to raise the red flag over its “unplanned and excessive expansion”. Even before the PMO’s intervention, there were signals that alerted the government to sit up and take notice.

The reluctance of lenders to fund highways built on the hybrid-annuity model (HAM), where the government itself pumps in equity to the tune of 40 per cent of the project cost, and the authority’s reliance on the EPC (engineering, procurement and construction) model for constructing roads have burdened the