The National Highway Authority of India’s (NHAI’s) debt is expected to go past the Rs 3 lakh crore-mark by the end of the current fiscal. As on November-end, the authority’s debt stood at Rs 2,72,484 crore and the authority is likely to borrow another Rs 31,500 crore more before March.
In the Budget for the 2021-22 fiscal, the government is likely to permit NHAI to borrow another Rs 65,000 crore in 2020-21, which means its total debt would reach Rs 3.69 lakh crore by the end of 2021-22 fiscal. At the end of 2018-19, NHAI had Rs 1.79 lakh crore debt.
So far in the current fiscal, NHAI has raised Rs 33,500 crore debt of which Rs 5,000 crore has been raised as long-term loan from the State Bank of India, Rs 1,500 crore through 54 EC bonds and Rs 27,000 crore through taxable bonds.
NHAI’s debt is sure to go up since project awards through BOT-Toll mechanism came to a naught since 2018-19 after falling sharply and consistently from a level of 96% of all project awards in 2011-12.
At the same time, there is a big onus on the agency to keep the pace of highway construction momentum when risk capital from private players is almost completely absent. While EPC contracts have been the mainstay of highway construction in recent years, other models like hybrid annuity model, 40% of the bid project cost is payable to the concessionaire by NHAI.
So far in the current fiscal also, NHAI has awarded projects through the engineering procurement and construction (EPC) and hybrid annuity model (HAM), in the ration of 60:40. Of its 4,500 km awards target for the current fiscal, NHAI awarded projects for a total cumulative length of 1,330 km in the first half of the current financial year, which is 1.6 times higher of 828 km awarded in the same period of 2019-20 and 3.5 times higher of 373 km awarded in of the same period in 2018-19.
The authority has been mandated to develop 34,800 km (including 10,000 km residual NHDP stretches) highway under the first phase of Bharatmala Pariyojana in October, 2017 with an estimated outlay of Rs 5.35 lakh crore. Up to March 2020, projects involving highway length of 10,676 km have been awarded under Bharatmala Paroyojana.
On the construction front, the authority’s target for the current fiscal is 4,500 km compared with a record of 3,979 km construction in the last fiscal.
Again, its non-debt receipts, including budgetary support, cess fund, ploughed back toll remittances and capital grants not rising in tandem with the expenditure. On the other hand, about 15% of the authority’s expenditure in 2018-19 was on debt servicing, compared with 11.33% in 2017-18.
The government keeps on downplaying the concerns over the NHAI’s surging debt, citing that the loans have sovereign guarantee. “We have our future 15 years’ estimates of cash flow — how much toll we will get, how much repayment we have to do — we are very comfortable,” NHAI’s chairman SS Sandhu said recently.
The Comptroller and Auditor General of India (CAG), however, has picked several holes in the profit and loss account and balance sheet furnished by the body for 2018-19. These include overstatement of fixed assets, booking receipts spread over 30 years as the year’s income, and even the failure to create a mandated reserve fund to service debt.
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