PMO suggests NHAI to improve road infrastructure financing, tells it to monetize its assets

The Prime Minister’s Office (PMO) has written a letter to National Highways Authority of India (NHAI) and sought its replies on the suggestions put forth by it on improving the present road infrastructure financing in the country.

In a letter dated Aug 17, Principal Secretary to the Prime Minister, Nripendra Misra wrote to Sanjeev Ranjan, Secretary, Ministry of Road Transport and Highways and acknowledged that the NHAI needed overhauling in respect of financial viability of the road projects thereby suggesting the various measures.

“…Road infrastructure has become financially unviable; private investors and construction companies are withdrawing from greenfield projects,” the letter concurred.

Here are the suggestions put forth by PMO to NHAI:

1. Reorganizing NHAI and its portfolio of roads: a)NHAI to be transformed into a Road Asset Management Company b) National Highway Grid blueprint to be prepared ad sanctioned for all roads that actually need to be taken up as NHs until 2030
2. NHAI to relook at Commercial Orientation of projects: a) To recognize each road stretch project as a project and create an SPV for it- will give idea of financial sustainability /unsustainability of project b) For each financially unsustainable project to take a conscious decision thereafter on how to meet the gap, if project is to be taken up c) Viability gap funding by the government for these projects, if considered, should be done upfront d) Once structured as a financially viable project, it can be bid out on BOT basis e) NHAI to stop constructing road projects
3. Aggressive Monetization of NHAI assets: a) NHAI to structure all existing completed or on-going projects on this principle and also as financially viable SPVs b) All these projects to be monetized by giving out of ToT model or as INVITs

Read the letter below:

https://drive.google.com/open?id=1df63o2Lpu-S0UEDnCmW25yxng6trhk44

—India Legal Bureau