No Dearth Of Money For NHAI, Says Nitin Gadkari

Road transport minister Nitin Gadkari tried to dispel concerns about the National Highway Authority of India, saying the state-run road builder is not under financial strain and his department has the full support of Prime Minister Narendra Modi.

That comes days after Nripendra Misra, former principal secretary in the Prime Minister’s Office, said “road infrastructure has become financially unviable”, and that NHAI is “totally log jammed with unplanned and excessive expansion of roads”. In a letter to Gadkari’s Ministry of Road, Transport and Highways, he suggested that NHAI to be transformed into a road asset management company and stop construction.

Gadkari, however, called it “wrong news”.

“One gentleman gave a presentation at Prime Minister’s Office. The note was 1,300-1,400 pages long. In that, he asked to monetise NHAI roads—which we are already doing. On the order of Prime Minister, his principal secretary sent it as a consultation paper (vicharatmak note) to the secretaries of all the nine departments,” Gadkari said addressing a press conference on the first 100 days of the Modi government. “One officer from our department clicked a picture and uploaded it on social media. As a result, wrong news got published. We have suspended that officer.”

The work on all NHAI projects is on in full swing, according to Gadkari. “There is no stop order, there is no dearth of money, no lack of work,” the minister said. “We have the support of the banks too. The TOT (toll-operate-transfer) model is doing very well. We have full support of the PM and PMO. Even the FM has told me to give more contracts, spend more and increase the speed.”

The ministry targets to allot construction worth Rs 5 lakh crore by March, he said, adding it won’t require any budgetary support from the government. “Economic viability is there, traffic density is good, internal rate of return is good, therefore there’s no problem for money,” he said. “Foreign investors, insurance funds, pensions are coming and buying roads. Everything is fine.”

The minister’s optimism comes even as brokerages have highlighted rising debt and falling pace of road awards.

The NHAI’s debt has jumped from Rs 40,000 crore to Rs 1.78 lakh crore in five years through March 2019.

A UBS research note said the NHAI project awards declined 70 percent over the previous year in financial year 2018-19 after a strong FY16-18. And given the PMO’s suggestion for a review, tepid highway awards could contribute to sluggishness in overall order inflows, he said in a note.

Nomura has cautioned that the ability of the roads sector to raise funds either as equity or debt is highly constrained.