NHAI In Very Sound Fiscal Position With Strong Project Pipeline: Chairman NN Sinha
National Highways Authority of India is in a “very sound” position with a strong pipeline of projects, its Chairman NN Sinha said on Wednesday.
NHAI is on its way to construct about 4,500 km of projects, higher by about 1,000 km than last year's 3,300 km of projects, said Sinha. It is also likely to float an Infrastructure Investment Trust, or InvIT, by the end of the year and was awaiting cabinet approval for the same, he added.
"There have been reports in sections of the media that contingent liabilities of NHAI are something of Rs 3 lakh crore. Either people do not understand what contingent liability is or the numbers are misreported. Contingent liability is uncertain in nature,” said Sinha.
"Our assessment and depending on the payout ratio that we have, we do not see that much number happening... We see the total amount of claim on NHAI on account of arbitration is about Rs 70,000 crore," Sinha said at an event organised by industry body Confederation of Indian Industry in New Delhi.
He said the numbers projected (Rs 3 lakh crore) were clearly "way off".
"The commentary is clearly ill-informed and probably designed to add to the gloom... We should take objective fact... NHAI books are in the open if anybody wants to see... Just because you have a commentary and you want to add to the kind of picture you want to portray...that is being very unkind and not fair for the sector," he said.
Sinha comments came after the Prime Minister’s Office, in a letter to the Ministry of Road, Transport and Highways, said that “road infrastructure has become financially unviable”, and that NHAI is “totally log jammed with unplanned and excessive expansion of roads".
According to Sinha, NHAI at present has arbitral claims worth Rs 70,000 crore and there are multiple sources of revenue.
Despite the model code of conduct during elections, Sinha said NHAI is on way to construct 1,000 km of highways more than last year. “Spending is going to be more, rather than less. There should be no concerns," the NHAI chairman added.
"There are concerns being raised whether NHAI will be able to take up projects other than on the BOT toll mode... I should allay your concerns that NHAI does appraise the projects on the basis of viability and there are projects which fit across the viability spectrum," he said.
Sinha said 4,140 km in highway projects meet 9 percent or more level of returns. This does not include greenfield projects as the traffic numbers are uncertain.
On the Build-Operate-Transfer model of road construction, Shinha said all projects will not fit into BOT and there are variety of instrumentation approaches. Even under the Bharatmala Project, about 60 percent of the highway projects will be funded under the Hybrid Annuity Model, about 30 percent on Engineering, Procurement and Construction model and about 10 percent on BOT model.
"Obviously when you have greenfield projects like the Vadodara-Mumbai Expressway, some of it may be executed under EPC and some on HAM, but BOT toll like approach cannot be viable," he said.
On funds, Sinha said NHAI will request the government for more budgetary resources and that it is also mobilising resources from the market besides revenue stream from highways construction.
Besides, masala bonds worth Rs 5,000 crore will be raised this year. Sinha also talked about contributing to the Jal Shakti Abhiyan through water cultivation mechanism across highway construction.