Highway Authority to Compile Asset Inventory for Smoother Monetization Process
The National Highways Authority of India (NHAI) is cranking up its game with the introduction of a register containing promising highway stretches for long-term monetization. This savvy move is designed to escalate the value of its assets and help investors craft their strategies more effectively.
As it is currently, NHAI annually publishes a list of highways intended for monetization via the Toll-Operate-Transfer (TOT) method or Infrastructure Investment Trust (InvIT), and the new register will supplement this list.
Revamping the Financial Year's Monetization Target
The ongoing financial year boasts 24 highway stretches that totals an impressive 1,472 kilometers. The budget aims for a whopping Rs 30,000 crore monetization target for FY25 via TOT and InvIT methods, and this number might even increase due to the aggressive monetization strategy document that outlines aggressive moves on asset sales.
Assorting Assets for Balanced Returns and Risks
The new register will encompass all the technical and financial data needed to assess the monetization potential of an asset. Based on traffic and revenue potential, assets will be categorized as highly attractive, moderately attractive, potentially attractive, and assets with low revenue per kilometre. These classifications will help in creating balanced bundles of assets for monetization through TOT or InvIT, sewing together immediate returns with future growth potential.
For an asset to qualify for the register, it must have been operational for at least a year, and all construction work should be complete with minimal enhancement work required. The assets with more than Rs 0.8 crore per kilometre per year toll revenue have been under consideration for monetization.
Prioritizing Operational National Highway Assets
The strategy document highlights that the NHAI will compile a public InvIT and make available three bundles for monetization every quarter. This move opens the highway monetization program for retail investment beyond the private InvIT – National Highway Infrastructure Trust (NHIT) that has witnessed four rounds of monetization.
The NHAI will only consider those highway corridors free of legal liabilities for inclusion in the list.
In brief, the NHAI's strategy revolves around value maximization of government road assets, transparency in processes, and fostering market development. By focusing on operational national highway assets, categorizing assets for feasible bundling, prioritizing those with high traffic and revenue potential, and promoting public-private partnerships, the NHAI aims to sustain its ambitious Rs 30,000 crore monetization target for FY25.
- To facilitate high-level investments in the transportation sector, the National Highways Authority of India (NHAI) is expanding its assets list, including highways suitable for Defi (Decentralized Finance) investment opportunities.
- In the pursuit of maximizing finance through market investments, the NHAI is planning to diversify its financing options, potentially opening up investment opportunities in finance through Infrastructure Investment Trusts (InvITs), the Toll-Operate-Transfer (TOT) method, and even Decentralized Finance (Defi).
