NHAI Plans Public InvITs for Investors

The National Highways Authority of India (NHAI) is considering the launch of a public infrastructure investment trust (InvIT). This initiative aims to enhance public funding for its asset monetisation pipeline. The proposal follows the successful launch of a private InvIT that has already monetised over 2,300 km of highways. NHAI’s goal is to widen its investor base and provide retail investors access to infrastructure assets.
About Infrastructure Investment Trusts (InvITs)
InvITs are investment vehicles that allow multiple investors to pool their money and invest in infrastructure projects. They offer a way for investors to earn returns from toll revenues generated by highways. NHAI’s private InvIT, the National Highways Infra Trust (NHIT), primarily serves institutional investors. The proposed public InvIT will expand opportunities for retail investors.
Asset Monetisation Strategy Report
NHAI’s Asset Monetisation Strategy Report outlines its plans and objectives. The report indicates that NHAI has achieved 71% of its target for the National Monetisation Pipeline (NMP) in the road sector. This achievement amounts to ₹1.15 trillion out of a ₹1.6 trillion target from 2021 to 2025. The overall monetisation currently stands at ₹1.4 trillion.
Future Targets and Road Sector Contributions
The government plans to set ambitious targets for NHAI in the upcoming second monetisation pipeline, scheduled until 2030. NHAI may need to monetise highways worth ₹3.5 trillion over the next five years. This target marks the importance of the road sector in the overall infrastructure monetisation strategy.
Challenges
NHAI faces challenges in the monetisation process, including complex regulations and lengthy procedures. One contentious issue is the determination of the initial estimated concession value (IECV). NHAI had previously ceased disclosing IECV for toll-operate-transfer (TOT) bundles due to concerns over bid concentration. However, it has now committed to improving transparency in this area.
Enhancing Investor Participation
To attract a diverse range of investors, NHAI plans to revamp its Toll Operate Transfer (ToT) mechanism. The new strategy will offer three different bundles of varying sizes each quarter. This approach aims to appeal to a broader spectrum of investors, from small-scale to large institutional players.
Funding and Reinvestment
NHAI has raised substantial funds through various monetisation routes. This includes ₹43,638 crore from InvITs and ₹49,000 crore from TOT bundles. The funds raised are reinvested into developing new highways, thus reducing reliance on the general budget.
Technological Advancements and Quality Improvement
NHAI’s strategy also emphasises the need for private sector participation. This involvement is expected to bring advanced technologies and improved management practices to enhance the quality and longevity of road assets.