With Rs 10,000 crore coming from tax-free infrastructure bonds, the National Highways Authority of India (NHAI) does not need to raise money till the end of 2013.
According to the current financial plan, the autonomous government agency will require Rs 24,000 crore till the end of next financial year. A senior NHAI official said on Thursday that Rs 14,000 crore of the Rs 24,000 crore would come from the government in the form of cess and toll income, while the rest was to come from sale of tax-free bonds. “We will not need to raise or borrow any money till the next fiscal end,” he added.
The 1988-founded NHAI has, for the first time, been allowed to raise Rs 10,000 crore through tax-free bonds with a coupon rate of 8.2 per cent for 10 years and 8.3 per cent for 15 years. The bonds have been a huge success and were oversubscribed on the first day.
The major portion of the money raised through bonds will be used in acquiring land. “Around 70 per cent of the Rs 10,000 crore would go in to acquire land for various projects, including expressways. The remaining would go for funding projects,” the official said.
The Authority would also allocate funds for arbitration cases, to soon be taken to a committee. Around Rs 10,000 crore is estimated to be stuck in various disputes with contractors.
All the same, NHAI will continue to raise money through 54EC bonds during the period. “During the period, we will also see a lot of 54EC bonds maturing will repay the investors,” said the official. “Our repayment would be in the range of Rs 160 crore per month.”
NHAI and Rural Electrification Corporation are the only two organisations allowed to raise money through short-term (three years) 54EC bonds.
Any capital gain from sale of long-term capital assets, such as real estate or gold, can get tax exemption by investing in the 54-EC infrastructure bonds.
NHAI plans to award 59 projects covering 7,994 km in the current and same number of projects in the next year. Out of the target of 59 projects for the current year, the highways authority has awarded 33 projects.
Riding high on the demand for the highway projects, NHAI has been able to award 21 out of 33 projects on a premium. The premium income from these 21 projects would come in between Rs 2,500 crore and Rs 3,000 crore per year, and will increase by five per cent every year till the concession period ends.
A company offering a premium means it is committing to an annual payment to the government over a period of time, instead of seeking a grant for building a road.
A substantial increase in premium income has brought down NHAI’s borrowing requirement by half. The B K Chaturvedi committee had said the highway authority would need to raise Rs 191,000 crore by 2030-31, but now the requirement stands reduced by Rs 1 lakh crore to Rs 83,000 crore.
