Highways sector look forward for investment
National Highways Authority of India (NHAI) and the Ministry of Road Transport and Highways (MoRTH) are ready to draw investment opportunities across roads, wayside amenities, and Multi Modal Logistics Parks (MMLPs). According to NHAI, Rs 7 trillion of projects are expected within 2-3 years. Which are as follows:
(1) Remaining projects of Bharatmala (Rs 5-6 trillion; 2) Setting up of 35 MMLPs (Rs 500 billion); (3) Setting up of wayside amenities (Rs 30 billion);(4) Intermodal stations (Rs 80 billion); (5) Ropeways (Rs 150 billion) and (6) an optical fibre network (30 billion). Centre also plans to award BOT projects Rs 200 billion over the next 2-3 years in road sector.
Kotak Institutional Equities has commented on the report, the NHAI’s investment is in line with the Bharatmala programme. A sharp rise in monetization and government support would be required to cross 4,500-5,000 km level. It further added Higher Hybrid Annuity Model (HAM) would require more private participation and investor friendly initiatives.
The government’s targets of Investment have been expected at much higher levels than past trends. The highway ministry intends to raise 400 billion via TOT bundles for 5,500 km of road projects and 200 billion via InvIT. The past trends has been Rs 170 billion in the three years for 1,400 km via the TOT model and Rs 60 billion via the InvIT route during FY22. MoRTH has also raised Rs 250 billion for the Delhi-Mumbai expressway via SPV financing and intend to raise Rs600 billion by FY24. The report further estimates the toll revenues of Rs 380 billion by FY23.
The major improvement in toll collection is due to higher radio frequency identification (RFID).It has the advantage of transparent monetization. 35 MMLPs at a total project cost of Rs 500 billion is planned by the government under DBFOT model. RFID has helped to significantly increase the toll collection but to achieve the Bharatmala project, both increased monetization and government support is required.