The National Highways Authority of India (NHAI) proposes to award 6,000-km highway projects in the current fiscal. If achieved, this would be the second-best for the authority ever, in terms of project awards. In 2017-18, NHAI had awarded 7,400 km highway projects.
The authority has also set its highest construction target ever for 2019-20. The authority, which had built 3,320 highways in 2018-19, hopes to construct 4,500 km (12.32km/day) in 2019-20, proposing to clock over 35% growth.
A source in the authority said a majority of the projects would be awarded through the hybrid annuity model (HAM) in 2019-20, in which the government contributes 40% of the project cost in phases throughout the construction period.
The source said though some banks are not still forthcoming to fund projects under HAM, 105 among 124 projects awarded thus far under the route have achieved financial closure.
The HAM model was created to incentivise bankers by lowering overall project risk so that they could lend more to public-private partnership (PPP) projects. It includes favourable clauses such as guaranteed partial payment from the NHAI even after a default by concessionaire and the subsequent termination of agreement.
In a research report titled, “HAM in a Jam”, Crisil had, in November last year, said though many HAM projects had achieved financial closure, most of them were still awaiting appointed dates on account of delays in land acquisition or regulatory clearances.
The official said apart from land acquisition, the increased cost of land acquisition (which in many cases have gone up three times) and the civil construction cost are coming in the way of higher award and construction of highway projects.
He said around 1,000 km of the targeted 7,400 km would be awarded through the engineering, procurement and construction (EPC) route in the current fiscal.
Efforts would be made to award 600 km project through the traditional PPP model.
NHAI proposes to raise around `75,000 crore debt in the current fiscal, of which `40,000 crore is expected to come from National Small Savings Fund. This apart, it might raise around `5,000 crore through masala bond. It will also raise money through tax-free bonds from the domestic fund.
The authority is projected to get around `37,000 crore budgetary support in the current fiscal. Besides, it hopes to raise around `9,000 crore by giving around 1,000 km of highways on long-term lease under the toll-operate-transfer (ToT) model.