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NHAI plans Rs 200-billion tax-free bond issue

The National Highway Authority of India, or NHAI, is expecting to raise Rs 200 billion from the market through long-tenor 9-10 per cent tax-free bonds and even private placements to part-finance the Rs 540-billion National Highway Development Project, or NHDP.

The government is in the process of appointing an advisor for the NHDP bonds, NHAI chairman Deepak Dasgupta said on the sidelines of a conference organised by the Federation of Indian Chambers of Commerce and Industry, or FICCI.

"The advisor is expected to be appointed by the next fortnight. We will then decide on the kind of bonds that we intend to issue as also the tenor and coupon rates,'' Dasgupta said.

The NHAI will be approaching the Securities and Exchange Board of India, or SEBI, with the proposal by July and expect to float the issue by September.

"We have set a target of raising Rs 200 billion through market borrowings.''

NHAI has also tied up $ 600-million loans from multilateral funding agencies for this year. ''Of this, $ 200 million is from the ADB and $ 400 million is from the World Bank. Next year also, we will be raising a similar amount from these agencies.''

Addressing the meeting, Surface Transport Minister Rajnath Singh said, the government is planning to raise Rs 20 billion per annum through the Re 1 cess levied on petrol and diesel.

''It is a 'non-lapsable' and non-diversionary fund. However, after completion of the NHDP, this fund could be utilised for the development of highways in general.''

The minister also invited the private sector to participate in highway development through the build-operate-transfer, or BOT, route.

Other than BOT, the NHAI is also aiming at other innovative implementing mechanisms like annuity or shadow toll based projects on experimental basis.

It has planned to set up a limited number of special purpose vehicles singly or in partnership to borrow from the market on project recourse basis, too.

UNI

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