NHAI slashes market borrowing goal by 50%

The National Highway Authority of India (NHAI) has slashed its market borrowing target for the current year by more than half. This is when the government imposed a 50-paise additional fuel cess during the current year exclusively for development of national highways.

While the budgetary target for market borrowings for the current year was Rs 8,500 crore, the NHAI had revised its target to Rs 4,082 crore, ministry officials said. This is the second year in a row that the NHAI will not meet its market borrowing goals. Last year, against a target of Rs 3,300 crore, it did not raise any funds at all.

"The need for going to markets has reduced to a great extent because expenditure from the budgetary support has been much lower than expected," a ministry official said.

Compared with 40 per cent of the project cost support earmarked for the build-operate-transfer project, the average viability gap funding till now has been 15 per cent of the project cost. This had enabled the authority to have spare funds, the officials said.

There have been many projects where private companies have quoted negative grants. In such cases, the companies have offered to pay the government for winning the contract, instead of asking for support.

In fact, nine months into the current year, the NHAI has not gone for market borrowings at all. It took a bank overdraft of about Rs 700 crore, which was repaid later.

The officials said in order to maintain liquidity for meeting temporary mismatch of funds, the authority had decided to go in for overdrafts, where withdrawals could be made without having a bank balance. The authority has scope of withdrawing Rs 2,000 crore more than the available balance.

This option was being exercised because it took at least six months for the funds raised through placing bonds in the market to reach the NHAI's coffers, they added. When its overdraft limit was about to be exhausted, the NHAI would go to the markets.

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Road so far

Target revised to Rs 4,082 crore for 2005-06 from Rs 8,500 crore

For 2004-05, against a target of Rs 3,300 crore, NHAI did not raise any funds