The Indian government plans to generate revenue of approximately two trillion rupees (equivalent to USD 24.1 billion) by monetising highways in the coming years, said rating agency CareEdge.
According to the agency’s report, the National Highways Authority of India is expected to build approximately 4,000 to 4,500 kilometers (equivalent to 2,796.2 miles) of new roads annually in the next three years, and the government can generate revenue from these assets using an Infrastructure Investment Trust (InvIT) or a toll-operate-transfer (TOT) model.
The government’s current plan, which is based on a public-private partnership model, has been successful as 88% of road projects awarded prior to March 2020 are now operational and can be monetised. Only 12% of projects awarded in the pre-2020 period are delayed due to weaknesses of their operators, the rating agency said.
88% of road projects awarded before March 2020 have successfully achieved operational status. It is worth noting that 12% of these projects have encountered delays, and a significant proportion, i.e 75% of the delayed projects belonged to weak sponsors, said the agency.
“While strong sponsors are expected to benefit from healthy balance sheet indicators, providing them with financial flexibility, moderate sponsors with a substantial under-construction portfolio and stricter sanction terms face amplified financing risks,” said Maulesh Desai, director at CareEdge Ratings.
The NHAI launched an InvIT back in November 2021 and raised nearly 102 billion rupees as of December 2022. The Indian government is looking to raise an additional 100 billion rupees through another tranche of InvITs before the end of the fiscal, local media reported.
NHAI introduced an InvIT in November 2021 and raised approximately INR 102 billion by December 2022. The Indian government is now planning to raise an additional INR 100 billion through another round of InvITs by the end of the fiscal year.
