Highways: Rs 20,000-crore loan needed every year

The National Highways Authority of India on Wednesday said it needs to borrow up to Rs 20,000 crore (Rs 200 billion) per year for the next 15 years to implement Rs 9 lakh crore (Rs 9 trillion) worth of road projects in the PPP mode till 2031-32.

"Funds were needed not only for the government, but also for the private sector in the road development programme, based on PPP model, which would involve a total investment of Rs 9 lakh crore till 2031-32," an official statement said, quoting NHAI chairman Brijeshwar Singh.

"NHAI would need Rs 10,000-20,000 crore (Rs 100-200 billion) annually as borrowing from the domestic and international market for a period of next 15 years," Singh said after a meeting with merchant bankers, investors, rating agencies and stakeholders in Mumbai.

About investments from abroad, he said though no data was available, international private equity firms were channelling foreign investment into the 30 per cent equity component of the project cost.

He added that foreign infrastructure companies which were presently coming as junior partners in projects were later expected to adopt the role of senior partners in projects of over Rs 5,000 crore (Rs 50 billion), before taking up road projects independently.

He said the target of building 20 km road every day had placed a huge financial strain on the government as the award process for construction for 36,000 km of roads was to be completed in the next three years.

"Currently, the central road cess and the 54 EC tax exemption bonds were the main source of funding for the government's portion in the highways project. However, the government was depending on a number of other sources like market borrowings, FDI and additional toll revenue to finance the 7-phase NHDP programme," he said.

Exuding confidence that the target for construction of over 12,000 km of roads in the current fiscal would be achieved, he said the work-in-progress will total 19,000 km by March, 2011.

He said the establishment of 120 land acquisition units in the country, with chief secretaries of the states supervising acquisition work, would expedite the projects.