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NHAI Could Soon Come Out With An IPO, Says Nitin Gadkari

Nitin Gadkari says NHAI has plans to come out with an IPO.



Nitin Gadkari, India’s road and transport minister, speaks during The Bloomberg Address in Mumbai (Photographer: Dhiraj Singh/Bloomberg) 
Nitin Gadkari, India’s road and transport minister, speaks during The Bloomberg Address in Mumbai (Photographer: Dhiraj Singh/Bloomberg) 

The National Highway Authority of India could soon come out with an initial public offering to use money from people to fund its projects, said Union minister Nitin Gadkari on Monday.

“It is in the process now. I’m thinking, but I need approval from the finance ministry,” he said on the sidelines of an Indo American Chamber of Commerce event in Mumbai. Gadkari did not share any other details about his ministry’s plans to take the central road authority public.

Ever-increasing traffic load on national highways means that the government will have to build an additional lane every three years, which will entail an investment of Rs 80,000 crore, he said. According to a July report by Nomura, national and state highways in India comprise less than 5 percent of the roads but account for 80 percent of traffic.

Gadkari said the government is planning to start 30 rural connectivity projects at an investment of Rs 8 lakh crore, of which five will begin in three months. It has already given out works of over Rs 5.6 lakh crore, he said.

The minister for road transport and highways, shipping and water resources said banks take up to a year to provide funds for projects and said he that NHAI will use its own fund to build roads under engineering-procurement-construction mode – an arrangement where the contractor does everything and hands over the project to the owner.

“Money is not a problem in road sector,” said Gadkari, stressing that he expects the banking sector to be forthright and start lending to infrastructure projects. Citing the example of Mumbai-Vadodara expressway, which is an engineering-procurement-construction project, he said work on the Rs 44,000-crore project would start in a month.

He said that the investor appetite for the toll-operate-transfer model was not very strong initially and it should improve in about six months. Once they can accept new models, the ministry would float a pilot project, he said.

The government is also serious about waterways, he said. The ministry is starting river connectivity projects worth Rs 50,000 crore in the next three months, he said.