Govt kick-starts process to list NHAI
The ministry for road transport has kick started the process for public listing of the National Highways Authority of India (NHAI), the nodal agency for the development, maintenance and management of highways in the country.
“We have started the process (for the listing)…we need an approval from the finance ministry,” said Nitin Gadkari, the minister for road transport and highways told newspersons.
Gadkari is confident that an initial public offer (IPO) for the NHAI will be successful just like it was for the Cochin Shipyard IPO which was subscribed 76 times. “I have no problem of money… if banks take too much time in granting approvals we will offer them as EPC projects. I am confident that if we take NHAI to the market we will get interest as much as Rs 10 lakh crore,” he said, he said referring to the demand from investors. He however did not specify how much the company would seek to raise.
EPC or engineering, procurement, construction is an agreement where the government gives out road building contracts to contractors after the acquisition of land and environmental clearances. The contractor has to design and execute the project and hand it to the government for a fee.
Gadkari said the delay in loan approvals from banks has forced the government to look at EPC projects rather the BOT (built operate transfer) of PPP (public private partnership).
nder BOT private companies finance, design, construct, own, and operate a project for a specific time frame while in PPP the private contractor bears the cost of the project and the government repays the sum in instalments on the basis of the agreed terms. Money generated from assets monetised under the toll operate transfer model could also be used for new EPC contracts.
“We have saved banks more than Rs 3 lakh crore of NPAs by providing land acquisition and environmental clearances for various projects. Now the problem is banks are taking one to one-and-a-half years to give approvals. In that case I am clear. We will give out the project as EPC like we have done in the Mumbai-Baroda highway project,” Gadkari said referring to the Rs 44,000 crore 380 km project which the government expect to start this year.
Gadkari said that the BOT and PPP models for construction are much better but until companies are ready to take on new projects the government will look at EPC. “Work must continue. BOT and PP are better for private investments but these companies are in coma and have to recover first,” Gadkari said.